We recently published a list of 7 Best Gaming Stocks To Buy Now. In this article, we are going to take a look at where Sony Group Corporation (NYSE:SONY) stands against the other best gaming stocks to buy now.
A Quick Look at the Gaming Industry
The gaming industry does not only provide entertainment but also drives innovation in technology and creativity. The global gaming market was valued at $249.55 billion in 2022. Looking forward, the market is expected to grow at a compound annual growth rate (CAGR) of 13.1% during 2023-2030 to reach $665.77 billion by the end of the forecast period. This expansion is driven by several key trends that are reshaping how games are developed and played.
The growing popularity of cloud gaming, the introduction of VR and AR technologies, and the rising interest in online gaming are some of the key trends driving market growth.
The rising interest in esports and online gaming tournaments is expected to boost consumer spending on games and contribute to market growth. Esports features teams and individual players competing in various video games. In July and August, the first-ever Esports World Cup took place in Riyadh, Saudi Arabia, attracting over 1,500 players and offering a massive prize pool of $60 million. The event spanned eight weeks and included 23 competitions across 22 different video games, such as Call of Duty and Fortnite. This tournament is part of Saudi Arabia’s Vision 2030 initiative, aimed at diversifying the country’s economy.
Emergence of Generative AI
Another key trend is the integration of generative AI in gaming. This technology allows for the creation of dynamic storylines and realistic characters that can interact with players in a more lifelike manner. Experts believe this will enhance player engagement by personalizing experiences based on individual actions. The potential for AI to craft entire game worlds opens up new avenues for creativity in game design.
According to Bernard Marr, a world-renowned futurist and author of “Generative AI in Practice: 100+ Amazing Ways Generative Artificial Intelligence is Changing Business and Society”, generative AI is revolutionizing video game development by providing tools that enable developers to create engaging content, realistic visuals, and immersive gameplay experiences. Marr believes that generative AI can help developers create vast, unique game environments through procedural generation, allowing for dynamic gameplay experiences that change with each session.
Moreover, this technology can generate music and sound effects that adapt to in-game events, enriching the overall player experience. By automating tasks like quest creation and dialogue writing, generative AI can help developers enhance storytelling and design. Marr thinks that although generative AI won’t replace human creativity, it can speed up game development and reduce costs, which is a big step forward for the gaming industry.
Methodology
To compile our list of the 7 best gaming stocks to buy now, we used the Finviz and Yahoo stock screeners to find the largest gaming companies. We also reviewed our own rankings, sifted through ETFs, and consulted various online resources. From an initial pool of more than 20 gaming stocks, we focused on the top 7 stocks most favored by institutional investors. Data for the hedge fund sentiment surrounding each stock was taken from Insider Monkey’s database of 912 elite hedge funds. The 7 best gaming stocks to buy now are ranked in ascending order based on the number of hedge funds holding stakes in them as of Q2 2024.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
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Sony Group Corporation (NYSE:SONY)
Number of Hedge Fund Holders: 29
Sony Group Corporation (NYSE:SONY), commonly known as Sony, is a Japanese multinational conglomerate corporation. It is a major player in the gaming industry, primarily through its subsidiary, Sony Interactive Entertainment. Known for its iconic PlayStation brand, Sony develops and sells video game consoles, software, and services. The company has released several successful consoles, including the PlayStation 4 and PlayStation 5, which have garnered a large and loyal customer base.
The corporation’s gaming segment is showing strong performance, with 116 million monthly active PlayStation accounts in June, reflecting a 7% increase from the previous year. Total play time also increased 8% year-over-year.
Sony Group Corporation (NYSE:SONY) released its results for the first quarter of fiscal year 2024, which ended on June 30, 2024. Despite not releasing new titles recently, user engagement remained high, driven by the growing PlayStation 5 user base and popular franchise games like Helldivers 2 and the Ghost of Tsushima PC version. Upcoming and new releases, including the live service game Concord, Astro Bot, and God of War Ragnarok for PC, are expected to further boost player interest and the company’s financial performance.
Additionally, Sony’s Network Services saw a 13% year-over-year increase in US dollar-based sales, largely due to a shift toward premium services like PlayStation Plus. The company is focused on enhancing user engagement and expanding its active user base while also strengthening the PlayStation platform. Meanwhile, the Studio business group is improving its development schedule and optimizing projects to ensure a steady release of hit titles.
On September 10, Sony Group Corporation (NYSE:SONY) unveiled the PlayStation 5 Pro, designed to enhance the gaming experience with advanced features. This new console boasts improved GPU performance, advanced ray tracing, and AI-driven upscaling, promising sharper images and smoother gameplay. The PS5 Pro aims to deliver richer gameplay experiences and is set to launch on November 7, 2024.
With a strong lineup of exclusive games and a commitment to innovation, Sony Group Corporation (NYSE:SONY) continues to be a major force in the gaming market. Over the past ten years, the corporation has grown its levered free cash flow at a compound annual growth rate (CAGR) of 11%.
SONY is one of the best gaming stocks to buy now. According to Insider Monkey’s Q2 database of over 900 hedge funds, 29 hedge funds held stakes in Sony Group Corporation (NYSE:SONY). As of June 30, Fisher Asset Management holds 38.32 million shares of the company, valued at $651.08 million, making it SONY’s most prominent shareholder.
Overall, SONY ranks 7th among the best gaming stocks to buy now. While we acknowledge the growth potential of SONY as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SONY but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.