Key Takeaways
- Bernstein shifted Sony rating from “Outperform” to “Market Perform”
- U.S. price target reduced to $22 from $30 (Tokyo: 3,400 yen from 4,600 yen)
- DRAM and NAND prices projected to increase sevenfold through late 2025 amid AI chip demand
- PlayStation 5 profitability under pressure; company may reduce console shipments
- FY2027 and FY2028 earnings projections lowered beneath consensus estimates
Shares of Sony (SONY) declined Monday after David Dai, an analyst at Bernstein, downgraded the entertainment and electronics giant to Market Perform from Outperform while reducing the price objective to $22 from $30 for U.S.-listed shares, and to 3,400 yen from 4,600 yen for Tokyo-traded stock.
The Tokyo-listed shares fell 1.3% to 3,333.6 yen in response to the analyst report.
The downgrade centers on escalating memory component expenses. Bernstein anticipates DRAM and NAND pricing will climb approximately seven times current levels before year-end, fueled by constrained supply and explosive demand for artificial intelligence memory applications.
Such dramatic cost inflation poses significant challenges for consumer electronics manufacturers. Sony finds itself particularly exposed to this pricing pressure.
According to Bernstein’s calculations, each PlayStation 5 unit already incorporated approximately $100 in memory expenses during 2025. A high double-digit percentage increase in memory pricing throughout the year threatens already-slim hardware profit margins.
The firm anticipates Sony will counter this pressure by allowing PS5 shipment volumes to decline, utilizing reduced unit sales as a strategy to minimize hardware losses. While defensive, this approach has limitations.
Bernstein cautioned that Sony possesses fewer cost-reduction options remaining after the company scaled back investment in live-service game development. The company’s operational flexibility continues to narrow.
Gaming Business and Next-Generation Console Outlook
The memory pricing challenge extends beyond the current PlayStation 5. Bernstein highlighted concerns regarding the PlayStation 6, observing that the identical memory cost environment could undermine the financial viability of the upcoming console generation.
While Sony hasn’t disclosed PS6 specifications or pricing details, the cost trends Bernstein identifies would create significant obstacles for any future hardware release.
Gaming isn’t the sole area of concern. Sony’s semiconductor division, which derives the majority of revenue from smartphone imaging sensors, confronts separate challenges.
With global smartphone shipments anticipated to contract and memory prices remaining elevated, Bernstein suggested Sony might experience weaker growth and potential market share erosion to competitors such as Samsung Electronics.
Profit Forecasts Reduced
Bernstein decreased its earnings per share projections for Sony spanning the upcoming two fiscal years.
The brokerage reduced its fiscal 2027 EPS forecast to 197 yen and its fiscal 2028 projection to 205 yen. Both estimates trail prevailing market consensus figures.
Analysts observed that profitability is essentially plateauing, suggesting investors may need to await fresh catalysts before witnessing meaningful earnings improvement.
The revised $22 U.S. price target suggests minimal upside potential from present trading levels, aligning with the new Market Perform recommendation.
Sony most recently changed hands at 3,333.6 yen on the Tokyo exchange as of 00:51 GMT Tuesday, registering a 1.3% decline for the trading session.
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