BofA Securities revises Sony Group (6758) operating profit forecast down 5%
BofA Securities revised its operating profit forecast for Sony Group for the fiscal year ending March 2027, projecting a 5% reduction. Sony Corp. shares are trading down 4.0% at ¥3,106 on 2026-04-30, falling from yesterday's close of ¥3,234.
The downward revision primarily stems from surging prices for DRAM and NAND memory semiconductors. Increased AI demand is driving these costs, which are pressuring Sony's PlayStation 5 gaming business. The BofA Securities report also lowered the target price for Sony shares from ¥5,000 to ¥4,600.
This decline extends a downward trend for Sony's stock, which has been observed since the company's Sony Honda Mobility business policy disclosure on April 21. Broader factors, including a reassessment of growth expectations and a shift of funds towards AI-related equities, have also contributed. The stock's cumulative decline since its November 2025 high now stands at approximately 30%.
Why rising chip costs are squeezing Sony's profit outlook
Sony Group is a global entertainment and technology powerhouse, serving consumers worldwide with a vast array of products and services. From PlayStation consoles and games to televisions, cameras, music, movies, and even financial services, Sony generates revenue through hardware and software sales, subscriptions, royalties, and financial product offerings, embedding itself deeply into our daily lives.
Today's share price dip stems from an analyst report highlighting the increasing cost of DRAM and NAND memory semiconductors, driven by surging AI demand. This rise in input costs is specifically impacting the profitability of Sony's crucial gaming division, particularly for products like the PlayStation 5. BofA Securities responded by lowering its operating profit forecast for Sony Group for the fiscal year ending March 2027 by 5% and reducing its target price from ¥5,000 to ¥4,600, amidst other factors like a re-evaluation of growth prospects.
This revision to future earnings expectations has prompted investors to reassess the company's outlook, with Sony Group (6758) currently trading down 4.0% at ¥3,106, a notable drop from yesterday's close of ¥3,234.
Imagine a high-end car manufacturer whose profit margins are suddenly squeezed because the price of a critical component, like specialised batteries for electric vehicles, has unexpectedly shot up. If they can't easily pass these higher costs onto customers without losing sales, or find cheaper, equally effective alternatives, they're forced to revise down their expected earnings for the year. This is similar to how the market views Sony's situation, with semiconductor costs acting as that crucial, more expensive component.
Sony Corp.
Sony Group Corporation (6758) is a diversified technology and entertainment conglomerate. It develops, produces, and sells electronic equipment, instruments, and devices for consumer, professional, and industrial markets across Japan, the Americas, Europe, and Asia-Pacific regions. The company's operations span gaming, including consoles and software distribution; music production, publishing, and animation; and film and television content creation and distribution, encompassing theatrical releases, series, and various television programmes. Sony also manufactures televisions, cameras, projectors, medical equipment, mobile devices, and semiconductor components. Additionally, it provides internet broadband services, recording media, and financial services such as life and non-life insurance and banking. Established in 1946, Sony Group Corporation is headquartered in Tokyo, Japan.