Goldman Sachs Reiterates Buy Ratings on Sony and Capcom; Positive on 2026 Game Lineups

Overview

This research report analyzes the product pipelines and investment potential of major Japanese gaming companies based on multiple game launch events held in early June 2026, including official events by PlayStation, Xbox, and Nintendo. Goldman Sachs reiterates Buy ratings on Sony Group and Capcom, citing strong product lines and multiple profit improvement drivers for Sony, and undervalued stock prices for Capcom relative to its robust earnings and pipeline. On Nintendo, a Buy rating is maintained despite limited short-term catalysts. Sell ratings are maintained for Square Enix and Bandai Namco, primarily due to elevated valuations or overly optimistic earnings guidance.

Core views

Platform Operators: Sony Group (Buy) maintains a strong lineup in FY2026 for both first-party and third-party software, beyond 'GTA VI'. Despite rising memory costs, the company demonstrates a clear strategy to balance growth and profitability. As PS5 enters the later stage of its lifecycle, hardware profitability can be managed through adjustments in sales volume and pricing, positioning Sony favorably against Nintendo. Nintendo (Buy) has only one major first-party title in 2026, the 'Ocarina of Time' remake, slightly below market expectations. However, with Switch2 price hikes already implemented in Japan and expected to follow in the U.S. and Europe in September, historical parallels with PS5 suggest steady medium-to-long-term adoption; share price recovery should await verification of momentum via sales data. Publishers: Capcom (Buy)'s 'Monster Hunter Wilds' DLC met expectations; the 2027 release of 'Resident Evil Veronica' serves as a positive catalyst. With 'Onmyoji: Way of the Blade' launching in September and expanded film content investments, Capcom's FY3/27 pipeline and activity calendar outperform peers, and its FY2 P/E nears the industry median, offering an attractive valuation. Square Enix (Sell): While 'Final Fantasy VII The Remake III' is scheduled for Spring 2027 and other new titles progress steadily, the company remains in the execution phase of structural reforms. Its FY2 P/E of 26x significantly exceeds the global gaming industry median of 16x, indicating overvaluation. Bandai Namco (Sell): Although release dates for titles such as 'Ace Combat 8' and 'Elden Ring' have been announced, the implicit 87% YoY growth in full-year half-3/27 digital business profit guidance does not improve the probability of achievement; the Sell rating is maintained.

Analysis framework

Goldman Sachs employs a deep-dive product line analysis and valuation comparison framework. For platform operators (Sony, Nintendo), focus is placed on hardware lifecycle positioning, cost pass-through capabilities, and software pipeline strength. For publishers (Capcom, etc.), emphasis is on release schedules, IP value, and valuation levels. Valuation methodologies: Sony uses Sum-of-the-Parts (SOTP), with FY3/29E as the base year; Nintendo, Capcom, and Square Enix use EV/NOPAT multiples referenced to historical industry medians with premiums or discounts applied; Bandai Namco's toy segment uses an EV/NOPAT median of 11.4x, and its digital business uses the median of Japanese gaming companies at 15.8x.

Methodology notes

• Valuation MethodSOTP Sum-of-the-Parts

  Sum-of-the-Parts (SOTP) Valuation

  Separately values each business segment of a company before summing them up, suitable for diversified conglomerates. Applied to Sony given its diverse portfolio spanning games, entertainment, sensors, and more.

• Valuation MethodEV/EBITDA valuation

  EV/NOPAT Multiple Method

  Ratio of Enterprise Value to Net Operating Profit After Taxes, used to measure overall company valuation. Applied to Nintendo, Capcom, etc., with reference to historical industry medians adjusted for premiums or discounts.

• Industry/Industrial Analysis FrameworkProduct life cycle

  Hardware Lifecycle Analysis

  Assesses the position of gaming consoles within their lifecycle (e.g., PS5 in the later stage) to evaluate profit management capabilities and pricing flexibility.

• Event Gaming & Behavioral FinanceExpectation Gap / Expectation Management

  Market Expectation vs. Actual Launch Comparison

  Compares event content with pre-event market expectations (e.g., number of major titles for Nintendo in 2026) to assess potential stock catalysts or pressures.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Sony Group (6758.T)

  Beneficiary: Strong PlayStation product line; rich FY2026 software pipeline

  Strengths

  Strong first-party and third-party software pipelines; PS5 in later lifecycle stages allows effective hardware profit management

  Weaknesses

  Pressure from rising memory costs

  Comparison

  Superior positioning in hardware profit management compared to Nintendo

  Risks

  PS5 sales missing expectations, software release delays, deteriorating hardware profits

• Capcom (9697.T)

  Beneficiary: Outstanding 2027 pipeline depth; attractive valuation

  Strengths

  Strong 'Monster Hunter' and 'Resident Evil' IPs; expanding into film content

  Comparison

  FY3/27 pipeline and activity calendar outperforms peers

  Risks

  Major title release delays, impairment due to shifting user preferences, erosion of IP value from pricing strategies

• Nintendo (7974.T)

  Neutral-to-Bullish: Medium-to-long-term Switch2 adoption logic holds, but short-term catalysts lacking

  Strengths

  Diverse software characteristics appeal to a wide user base; Switch2 price hike allows learning from PS5 adoption experience

  Weaknesses

  Only one first-party major title in 2026 (a remake), below market expectations

  Comparison

  Weaker positioning in hardware profit management compared to Sony

  Risks

  Switch2 sales underperforming, slowing active user base on current Switch, major title delays

• Square Enix (9684.T)

  Detractor: Overvalued; in execution phase of structural reforms

  Strengths

  Medium-term pipeline progressing steadily; 'Final Fantasy VII' trilogy third installment launching in 2027

  Weaknesses

  FY2 P/E of 26x significantly exceeds industry median of 16x

  Comparison

  Valuation level higher than global gaming industry

  Risks

  No major HD game releases in short term; continued mobile game sales decline; delayed structural reform benefits

• Bandai Namco (7832.T)

  Detractor: Overly optimistic digital business profit guidance

  Strengths

  Release dates confirmed for 'Ace Combat 8', 'Elden Ring', etc.

  Weaknesses

  Probability of achieving 87% YoY growth target for digital business remains low

  Comparison

  Digital business valuation multiple higher than industry average

  Risks

  Toy sales underperforming; no new mobile hits; insufficient repeat sales growth for console games

Key data

• Sony Target PriceJPY 4100Based on SOTP valuation, base year FY3/29E
• Nintendo Target PriceJPY 10500Based on FY3/29E EV/NOPAT of 20.1x
• Capcom Target PriceJPY 4200Based on FY3/28E EV/NOPAT of 21.3x, representing a 25% premium to the industry
• Square Enix FY2 P/E26xSignificantly higher than the global gaming industry median of 16x
• Bandai Namco Digital Business Profit Guidance87% YoY GrowthImplied growth rate for 2HFY3/27; deemed overly optimistic by Goldman Sachs
• Capcom FY2 P/ENear Industry MedianAttractive valuation accompanying robust earnings growth

Impact & implications

The report suggests that Sony possesses multiple profit improvement drivers even in a high-cost environment thanks to its strong product lineup and cost management; Capcom's deep pipeline and valuation advantage render its stock undervalued; Nintendo must wait for Switch2 sales data to validate the long-term adoption logic; Square Enix and Bandai Namco face short-term lack of upside catalysts due to elevated valuations or overly optimistic earnings guidance. Overall, industry sentiment is expected to improve in September–October 2026 with the concentrated release of major titles like 'GTA VI'.

Risks

• Sony: PS5 hardware sales miss expectations, software release delays, hardware profits deteriorate due to cost increases
• Nintendo: Switch2 sales miss expectations, declining active user base on current Switch platform
• Capcom: Major title delays causing pipeline volatility, impairments from shifting user preferences, IP value erosion from pricing strategies
• Square Enix: No major HD titles in short term; continued mobile game sales decline; delayed structural reform benefits
• Bandai Namco: Toy sales underperforming; no new mobile hits; insufficient repeat sales growth for console games

What to watch

• Sales data following Switch2 price hikes in the U.S. and Europe in September
• Market reaction following major title launches like 'GTA VI' in September–October 2026
• Progress of Capcom's 2027 'Resident Evil Veronica' release
• Manifestation of Square Enix structural reform benefits in FY3/27
• Achievement status of Bandai Namco's digital business profit guidance