Sony Corp saw its Tokyo-listed stock decline after brokerage Bernstein downgraded the company and reduced its price target, flagging rising memory expenses as a material headwind for earnings growth over the coming years.
In a research note published on Tuesday, Bernstein moved Sony's rating from "outperform" to "market-perform" and lowered its price target to 3,400 yen from 4,600 yen. Following the note, shares in Tokyo slipped 1.3% to 3,333.6 yen as of 00:51 GMT.
The brokerage's concern centers on the impact of surging demand for artificial-intelligence memory on spot DRAM and NAND costs. Bernstein and other analysts cited in the note expect memory prices to climb sharply - with a projection that prices could rise more than sevenfold by the end of the year - a trend the broker says will create a significant cost squeeze for consumer electronics makers.
Bernstein highlighted the implications for Sony's gaming division. The firm estimates PlayStation 5 hardware carried roughly $100 of memory costs per unit in 2025. A further high double-digit increase in memory expenses this year, the broker warned, could materially undermine hardware profitability. To limit losses on consoles, Bernstein expects Sony to trim PlayStation 5 shipment volumes, though it added that the company has fewer levers to cut costs after scaling back spending on live-service game development.
The downgrade also extends to Sony's semiconductor business, which derives most of its revenue from smartphone image sensors. Bernstein noted that with global smartphone shipments expected to decline and memory prices staying elevated, Sony may face slower growth in its semiconductor segment and risk losing market share to competitors such as Samsung Electronics.
Reflecting these headwinds, Bernstein reduced its earnings-per-share forecasts for Sony's fiscal 2027 and 2028 to 197 yen and 205 yen, respectively, positioning those estimates below prevailing market consensus. The broker's analysts described Sony's earnings trajectory as flattening and suggested that investors may need to wait longer for fresh catalysts to drive a return to stronger profitability.
Higher memory costs and a softer smartphone market are the central uncertainties identified by Bernstein. The firm expects these factors to weigh on operating margins, unit economics in gaming hardware, and the growth path of Sony's semiconductor revenues.
What to watch next
- PlayStation 5 shipment plans and any management commentary on hardware margins.
- Trends in DRAM and NAND pricing and industry commentary on AI-driven memory demand.
- Smartphone shipment trends and competitive dynamics in image sensors, particularly actions by Samsung Electronics.