Game + Music dual-engine drive! Sony raises profit forecast, stock price hits strongest increase in four months

According to Zhitong Finance APP, Sony Group Corp., a leader in the semiconductor and entertainment industries in Japan, has raised its profit forecast due to accelerated growth in its entertainment business segment, alleviating investors' concerns about potential tariffs on chip products imposed by the U.S. government that could significantly damage Sony's fundamentals. As a result, its stock price saw the largest increase in four months in the Japanese stock market. In the U.S. stock market, benefiting from the upward revision of performance expectations, Sony (SONY.US) ADR surged over 8% in after-hours trading.

The impact of tariffs has also been mitigated for Sony due to a better-than-expected tariff rate agreement between the U.S. and Japan. Sony estimates that the impact of Trump's tariff policy will reach 70 billion yen, down from the previous forecast of about 100 billion yen announced in May. The company stated that this estimate is based on the tariff rate as of August 1, although the specifics remain uncertain and may still change.

It is understood that the unexpectedly favorable U.S.-Japan trade agreement reached on July 23 has led to a continued rebound in Sony's stock price. U.S. President Donald Trump stated on social media that the U.S. has reached a trade agreement with Japan, setting the tariff on Japanese goods at 15%, which surprised investors, as it was a reduction from the previously threatened 25% tariff. Regarding automobiles, Trump announced a 12.5% tariff on cars imported from Japan, combined with the previous 2.5% tariff rate, totaling 15%, significantly lower than the previous 25% automobile tariff level.

Sony was once a well-known manufacturer of widely used home electronics such as portable cassette players, but it has now become a comprehensive entertainment giant covering gaming, film, and music, as well as a global leader in smartphone image sensors.

Sony's operating profit in the first fiscal quarter surged 36%, raising annual performance expectations

Sony announced on Thursday that the unexpectedly strong growth momentum in its music and gaming segments has boosted the company's performance outlook. The monthly active users on the Sony PlayStation platform increased by 6% year-on-year, and total gaming hours also rose. From April to June in the first fiscal quarter, Sony sold a total of 2.5 million PlayStation 5 gaming consoles, a year-on-year increase of 4%. In the music sector, despite significant fluctuations in the yen exchange rate, a 5% revenue growth was still achieved.

For the quarter from April to June 2025, Sony's overall operating profit increased significantly by 36.5% year-on-year, reaching 340 billion yen, exceeding Wall Street analysts' average expectation of about 288 billion yen. The quarterly operating profit in the gaming segment doubled to 148 billion yen. Sony's management stated that driven by sales of online services and favorable exchange rates, the profit outlook for the gaming business is expected to be even stronger.

The entertainment business segment of Sony Group mainly consists of three major divisions: Gaming & Network Services (G&NS), Music, and Film & Television, which also derive anime, mobile applications, and related derivative businesses. These segments collectively contribute the vast majority of Sony Group's revenue and operating profit and are the core pillars of its "Emotionally Moving the World" strategy The Tokyo-based giant has raised its overall operating profit forecast for the fiscal year ending in March next year by 4% to 1.33 trillion yen (approximately $9 billion), roughly in line with Wall Street analysts' estimates. In May of this year, amid significant uncertainty regarding the new import tax system in Washington, Sony warned that profits would decrease by 100 billion yen. With the recent trade agreement between the U.S. and Japan, the company now expects the tariff impact to be about 70 billion yen.

Boosted by this news, Sony's stock price rose by as much as 7.6% during Thursday's trading session in Japan, fully reversing earlier losses on the same day.

Future Focus on U.S. Chip Tariff Details

Analyst Hideki Yasuda from Toyo Securities stated, "The growth rate of PlayStation Plus subscription users has exceeded expectations, and the hits in anime and mobile games have strengthened the growth outlook for the entertainment business. However, we need to closely monitor the impact of developments in the details of U.S. chip tariff policies on Sony's fundamentals."

The music segment has become a reliable pillar of performance growth for Sony, providing stable cash flow growth compared to the more volatile consumer electronics and image sensor businesses. The revenue growth from copyright sharing on music streaming platforms remains strong, while popular anime works under Sony have helped its artists break into the mainstream market.

With the latest "Demon Slayer" movie grossing as much as 12.9 billion yen at the box office just 10 days after its release in Japan, Sony's anime business revenue is expected to continue to grow significantly in the coming months. The mobile game "Fate/Grand Order," operated by Aniplex, is also celebrating its 10th anniversary this year.

However, U.S. President Donald Trump has threatened to impose a 100% tariff on imported chip products and may impose additional taxes on any products containing high-end chips, putting pressure on Sony and other global hardware manufacturers. Sony produces critical smartphone camera sensors for Apple’s iPhone and most Android competitors. If the tariffs are fully implemented, it could force global exporters to readjust their supply chains.

Sony's semiconductor business has long provided dominant CMOS image sensors (CIS) in the global image sensor market for major smartphone manufacturers like Apple (AAPL.US) and is currently ramping up its efforts in the autonomous driving sector, actively expanding its second growth curve.

For Sony, the relatively optimistic news is that Apple's cumulative $600 billion investment in the U.S. is expected to help Sony's smartphone sensors avoid Trump's potential 100% chip import tax.

On Wednesday local time, U.S. President Donald Trump stated that the U.S. would impose approximately 100% tariffs on chips from all countries that do not produce chips in the U.S. or do not plan to produce chips in the U.S. However, companies that have committed to manufacturing in the U.S. or are in the process of building chip manufacturing plants will not be affected.

"In other words, we will impose approximately 100% tariffs on chips and semiconductor products. But as long as you build a factory in the U.S., you will not be taxed. Companies like Apple, even if you have not yet started large-scale production, as long as you are in the factory construction phase or have clearly committed to participating in U.S. manufacturing plans, you will not be taxed." "Trump said on Wednesday.

Sony's gaming business growth continues! After 'Ghost of Tsushima', there's 'GTA 6'

Sony's management stated in an earnings meeting that its PlayStation business is committed to focusing on improving profitability and reducing hardware marketing costs. Sony's internal studio will launch the highly anticipated sequel to 'Ghost of Tsushima'—'Ghost of Tsushima: Director's Cut'—in October, which is expected to significantly boost PS series product sales during Sony's year-end shopping season.

This year, the global gaming console industry was originally expected to receive a record boost from the release of 'Grand Theft Auto VI' (GTA 6), but the latest installment in the GTA series has been postponed to 2026, when it will debut on PlayStation 5 and Xbox Series X/S platforms.

Wall Street analysts expect that 'GTA 6' could break almost all records in the video game industry—whether in terms of player scale or sales statistics. Wall Street investment firm Wedbush Securities predicts that the order growth for Take-Two, the publisher of the GTA series, over the next two fiscal years will primarily come from the upcoming release of 'GTA 6' next year