- Price
- $24.79
- Fair value
- $34.00
- Discount
- 27.1%
- Uncertainty
- Medium
- LSEG rating
- 1.75
- Moat
- Wide
- Next earnings
- 2026-11-10
- Next earnings is estimate
- Yes
- Company name
- Sony
- Sector
- Games, entertainment & image sensors
- About
- Sony Group is a Japanese company with five main segments. Game & Network Services sells the PlayStation 5 console, its own games and the PlayStation Network subscriptions, and it takes a share of the sales of other companies' games on its store. Music owns record labels and music publishing rights, and it earns money from streaming, live events and licenses. Pictures makes films and TV series and runs Crunchyroll, an anime streaming service with more than 21 million paid subscribers in March 2026. Entertainment, Technology & Services sells TVs, cameras and audio products. Imaging & Sensing Solutions makes image sensors, mostly for smartphones. In the year to March 2026, sales were 12.48 trillion yen and operating income was 1.45 trillion yen; games gave about 38% of sales. Sony spun off its financial services business, Sony Financial Group, on October 1, 2025.
- Thesis
- The market prices Sony lower because the surge in memory chip prices raises the cost of the PlayStation 5 and of Sony's electronics, while the PS5 is late in its life. In May 2026, Sony forecast that game sales will fall 6% in the year to March 2027 because it sells fewer consoles. Investors also worry about the effect of AI on content businesses and see few new growth drivers. Sony answered with a buyback of up to 500 billion yen from May 2026 to May 2027. For the gap to close, three things must be true. First, Sony must reach its raised forecast for the year to March 2027: operating income of 1.72 trillion yen, with 660 billion yen from games. Second, PS5 hardware profit must stay at the level of the prior year, as Sony planned in July 2026, although memory prices stay high. Third, Grand Theft Auto VI, which Take-Two plans to release on November 19, 2026, must raise PlayStation use and software sales in the holiday quarter. The evidence comes with the Q2 report around the start of November 2026, the game launch on November 19, 2026 and the Q3 report in February 2027. If these checks pass, the gap can close over the next two to four quarters. The main risk is that memory costs rise more and force Sony to cut PS5 volumes or margins.
- Risks
- Memory chip prices rose sharply in 2026. Memory is a large part of the cost of a PS5, a TV and a camera. If prices rise more, Sony must raise prices, sell fewer consoles or accept lower margins. Sony said in July 2026 that memory prices remain a key challenge for its electronics business.
The PS5 is late in its life cycle, and Sony spends money on the next platform. PS5 unit sales fell in Q1 of the year to March 2027, and total playtime fell 4%. Game profit depends on a few large titles, such as Grand Theft Auto VI, which other companies make and can delay.
A strong part of the recent profit growth came from a weak yen. In Q1 of the year to March 2027, sales grew 8% in yen but fell about 1% at constant currency. A stronger yen lowers the value of Sony's foreign sales and profit.
Image sensor sales depend on a small number of smartphone makers. The joint venture with TSMC needs large investment before production starts in 2029. Earthquakes in Kumamoto, where Sony makes sensors, stopped production in 2016 and again in July 2026.
US tariffs raise the cost of goods that Sony imports into the US. Refunds of tariffs that the US Supreme Court found unauthorized helped game profit in Q1 of the year to March 2027, and this help will not repeat.
- Balance sheet
- Cash: ¥2,170.0B
Debt: ¥1,204.2B
Net cash: ¥965.8B
Debt due within 12 months: ¥210.5B
Ratings: Moody's A2, S&P A+
Sony funds itself with bonds and bank loans of the parent company and with cash from its businesses. At June 30, 2026, debt was short-term borrowings of 49.8 billion yen, long-term debt due within one year of 160.6 billion yen and long-term debt of 993.7 billion yen. Debt does not include 666.4 billion yen of lease liabilities. Long-term debt rose by 169.3 billion yen in the quarter, and Sony issued $1.0 billion of US dollar notes on June 30, 2026. Total equity was 8.77 trillion yen. Since the spin-off of Sony Financial Group on October 1, 2025, the balance sheet does not include the insurance and bank assets. The ratings are those of the June 2026 notes. Sony plans buybacks of up to 500 billion yen to May 2027, and it had used 263.4 billion yen by September 30, 2026. It forecasts operating cash flow of 1.5 trillion yen for the year to March 2027.
As of 2026-06-30.
- Checkpoints
- Nov 10, 2026 (estimate): Q2 results: game profit and memory costs. Pending. Watch: Game operating income on track for the 660 billion yen forecast and no cut to the 1.72 trillion yen group forecast pass; a lower forecast because of memory costs fails.
Nov 19, 2026: Grand Theft Auto VI launch. Pending. Watch: A launch on the planned date with strong PS5 sales of the game passes; a new delay fails.
Feb 2027 (estimate): Q3 results: holiday quarter. Pending. Watch: Higher PlayStation monthly active users and game sales than a year earlier, with PS5 hardware profit at the prior-year level, pass; lower game profit fails.
- Recent events
- 2026-10-05: Sony said that it had bought back 74.5 million shares for 263.4 billion yen by September 30, 2026. This is about 53% of the 500 billion yen buyback that runs from May 11, 2026 to May 10, 2027.
2026-08-11: Sony Semiconductor Solutions signed a definitive agreement with TSMC to form a joint venture in Kumamoto, Japan, for next-generation smartphone image sensors. Sony will control it. Volume production is expected to start in 2029. Sony expects no material effect on its results for the year to March 2027.
2026-08-07: Take-Two confirmed the November 19, 2026 launch of Grand Theft Auto VI on PlayStation 5 and Xbox. Sony expects the game to help PS5 use and software sales.
2026-07-31: Sony reported Q1 results for the year to March 2027. Sales were 2.84 trillion yen, up 8%, and operating income was 476.5 billion yen, up 40%. At constant currency, sales fell about 1%. Image sensor operating income more than doubled, and game operating income rose 37%, helped by US tariff refunds. Sony raised its full-year operating income forecast to 1.72 trillion yen from 1.60 trillion yen. It said it has the memory it needs for the PS5 volumes it plans this year.
2026-07-28: An earthquake hit Kumamoto, Japan. Sony's Kumamoto Technology Center, which makes image sensors, stopped production. Sony did not include the effect in its forecast. Press reports in August 2026 said the plant was back to normal operation.
2026-06-24: Sony priced $1.0 billion of senior unsecured notes: $500 million at 4.657% due 2031 and $500 million at 5.089% due 2036. The notes are rated A2 by Moody's and A+ by S&P.
2026-05-08: Sony reported results for the year to March 2026. Sales were 12.48 trillion yen and operating income was 1.45 trillion yen. It forecast lower game sales and higher game profit for the next year, set a buyback of up to 500 billion yen and up to 230 million shares, and signed a non-binding agreement with TSMC on image sensors.
2026-04-21: Sony and Honda agreed to scale down their joint venture Sony Honda Mobility. In March 2026, they stopped the development and launch of its AFEELA electric cars.