Sony Stock Slides After Bernstein Sounds Alarm on Memory Costs

TLDR

• Bernstein downgraded Sony from “Outperform” to “Market Perform”
• Price target cut to $22 from $30 (Tokyo target: 3,400 yen from 4,600 yen)
• Memory prices forecast to rise 7x by end of 2025 due to AI demand
• PS5 hardware margins at risk; Sony may let PS5 volumes decline
• Fiscal 2027 and 2028 EPS estimates cut below market consensus

Sony (SONY) fell after Bernstein analyst David Dai cut the stock to Market Perform from Outperform on Monday, slashing the price target to $22 from $30 in the U.S., and to 3,400 yen from 4,600 yen on the Tokyo exchange.

Sony Group Corporation, SONY

Tokyo-listed stock dropped 1.3% to 3,333.6 yen following the note.

The core of the downgrade is memory costs. Bernstein expects DRAM and NAND prices to rise roughly sevenfold by the end of the year, driven by tight supply and surging demand for AI-related memory.

That kind of cost spike is bad news for consumer electronics makers. Sony is squarely in the crosshairs.

Bernstein estimates that the PlayStation 5 already carried around $100 in memory costs per unit in 2025. A high double-digit percentage rise in memory prices this year puts pressure on hardware margins that were already thin.

The brokerage expects Sony to respond by letting PS5 shipment volumes slide, using lower unit sales as a way to limit hardware losses. It’s a defensive move, but it comes with limits.

Bernstein warned that Sony has fewer cost-cutting levers left after the company pulled back on live-service game development spending. The room to maneuver is getting tighter.

PlayStation and the PS6 Question

The memory cost issue doesn’t stop at the PS5. Bernstein raised questions about the PlayStation 6 as well, noting that the same memory pricing environment could complicate the economics of the next console generation.

Sony hasn’t announced PS6 pricing or specs, but the cost trajectory Bernstein is flagging would be a headwind for any new hardware launch.

The gaming segment isn’t the only concern here. Sony’s semiconductor business, which generates most of its revenue from smartphone image sensors, faces its own pressure.

Global smartphone shipments are expected to decline, and with memory prices staying elevated, Bernstein said Sony could see slower growth and possible market share losses to rivals like Samsung Electronics.

Earnings Estimates Cut

Bernstein lowered its earnings per share forecasts for Sony across the next two fiscal years.

The firm cut its fiscal 2027 EPS estimate to 197 yen and its fiscal 2028 estimate to 205 yen. Both figures sit below current market consensus.

Analysts noted that earnings are essentially flattening, and investors may need to wait for new catalysts before the profitability picture improves.

The price target reduction to $22 in the U.S. implies limited upside from current levels, consistent with the new Market Perform rating.

Sony last traded at 3,333.6 yen on the Tokyo exchange as of 00:51 GMT on Tuesday, down 1.3% on the session.

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