Sony’s Profit Surge: Gaming Division Powers Up as Tariff Headwinds Fade

Sony just leveled up—big time. The tech giant's gaming division is firing on all cylinders, driving a bullish profit forecast revision that's got Wall Street nodding (for once). Tariffs? Barely a speed bump.

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Tariffs Get Played

Remember those trade war doom predictions? Sony just dodged them like a Soulsborne protagonist. Supply chains adapted, costs got absorbed, and suddenly those 'existential threats' look about as dangerous as a loot box lawsuit.

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Sony increases its profit predictions

Sony Group Corp. has raised its annual operating profit forecast by 4% to ¥1.33T, around $9.01B based on current rates. The company increased the forecast on Thursday, citing a smaller-than-expected hit from U.S. tariffs and strong performance in its gaming division.

Sony anticipates a tariff impact of ¥70B, down from the ¥100B forecast in May. This revision is due to the tariff rates as of August 1, according to Chief Financial Officer Lin Tao, who added during an earnings briefing that the situation remains fluid.

“There are still some fluid aspects, such as product-specific tariffs,” Lin said, but he cautioned that further trade disruptions, particularly from the U.S., could have a greater effect from the second quarter onward.

Japan and the United States reached a trade agreement last month to put the tariff uncertainties behind them, but that deal remains delicately poised with several knots remaining to be ironed out.

Sony reported a 36.5% year-on-year increase in operating profit for the April–June quarter, reaching ¥340B. That figure significantly surpassed the ¥288B average estimate from eight analysts surveyed by LSEG.

The company’s quarterly operating profit for the games division more than doubled to ¥148B, thanks to a surge in network service revenue and strong sales of third-party game titles. Sony sold 2.5 million PlayStation 5 units in the first quarter, which represents a 4% increase compared to the same period last year.

Recent game releases have also bolstered its gaming business. “Death Stranding 2: On The Beach” launched in June and received positive reviews, while “Ghost of Yotei” is set for release in October.

“Sony is further cementing its dominance in high fidelity gaming,” said Serkan Toto, the CEO of the gaming consultancy Kantan Games. “In my view, Sony is now competing with the PC more than the Xbox,” he added, referencing Microsoft’s rival console.

The gaming industry expected a major boost this year with the launch of “Grand Theft Auto VI,” but the highly anticipated title has been delayed until 2026. The postponement could provide an opening for competitors such as Nintendo, which recently reported strong early demand for its new Switch 2 console.

Sony has benefited from expanding its business

Sony’s transformation from a household electronics maker to a wholesale entertainment and technology leader continues to pay off. The company was once best known for its “Walkman” portable cassette player, but now its products span games, music, movies, and smartphone image sensors.

Sony is preparing to reduce its ownership stake in its financial services business. The company plans to spin off the unit, reducing its stake to below 20% and listing the business on the Tokyo Stock Exchange on September 29. This goal is to streamline operations and allow both entities to pursue growth more independently.

Sony’s strong Q1 earnings were announced during the midday trading break on Thursday, prompting a positive reaction from investors. The company’s shares jumped 4% after the announcement and have gained around 15% year-to-date.

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