Sony Group (SONY), a Japanese gaming and tech firm, is expecting its profit for the next financial year to rise significantly. The company anticipates this despite the low sales rate of its current flagship gaming console, the PlayStation 5 (PS5), and rising memory prices due to increased demand for AI data centers.
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Sony claimed that profits from its other businesses helped offset weaknesses in the gaming hardware business in Q4 2025. Hence, it is forecasting a 13% rise in its net profit at the end of the next financial year.
PS5 Slowdown and Memory Price Surge Weigh on Sony’s Gaming Business
According to its Q4 2025 financial report, Sony recorded revenue of 3.04 trillion yen, above analysts’ expectations of 2.90 trillion yen. However, its operating profit was 164 billion yen, lower than the expected 278 billion yen.
The drop was caused by weaker sales in the firm’s hardware business. Sales fell to 110 billion yen, down from 183 billion yen the previous year. At the same time, PS5 sales dropped to 1.5 million units, down from 2.8 million during the same period last year.
Sony said rising memory chip prices are hurting its PlayStation business because memory chips are the key parts used in making the PS5. Manufacturers are now sending more of these chips to AI data centers due to growing demand, leaving less supply for electronics firms.
Sony also raised the price of its PS5 for the second time in less than a year this March due to global market pressure. The company now expects that higher memory prices could reduce its 2026 earnings by about 30 billion yen.
Despite these challenges, Sony still expects its gaming hardware business to continue growing, as it did last year. The firm added that future PS5 sales will largely depend on whether it can secure memory chips at lower prices.
Sony Forecasts Profit Growth as Other Businesses Offset Gaming Weaknesses.
Despite problems in its gaming business, Sony expects its net profit for the financial year ending March 2027 to rise to 1.16 trillion yen, up from 1.03 trillion yen this year.
The company said stronger earnings from its image sensor and music businesses helped offset losses in its gaming hardware unit. Sony also said mobile sensor shipments performed better than expected during the quarter, especially among major smartphone makers.
Sony also announced plans to buy back up to 500 billion yen worth of shares over the next year. This shows confidence in its long-term growth and a stronger focus on rewarding shareholders.
The company’s stock, SONY, stayed mostly steady after the earnings report, closing about 0.5% lower on May 8. However, they are still down around 23% since the start of the year, even after gaining more than 20% in each of the past three years.
Sony’s Q4 profit was also affected by losses linked to its canceled electric vehicle partnership with Honda (HMC) and costs tied to its 2022 purchase of Bungie, a game developer. The firm also expects revenue for the next financial year to fall slightly to 12.3 trillion yen, down from 12.5 trillion yen this year.
Is Sony a Good Stock to Buy?
Wall Street analysts rate Sony Group Corporation (SONY) a Moderate Buy, based on TipRanks consensus data. Analysts have projected a 12-month average price target of $22 for the stock, implying 7.9% upside. Over the past 24 hours, SONY has risen nearly 2% but has fallen over 10% in the past three months, reflecting mixed investor sentiment. For more information on this stock’s performance, rating, and price target, visit the TipRanks Stocks Comparison Center.
