Goldman Sachs has published a research note identifying three Japanese videogame stocks it believes offer the best value for investors. The investment bank has singled out Nintendo Co Ltd, Sony Group Corporation, and Capcom Co Ltd as its top picks in the sector, citing robust intellectual property, expanding digital sales, and favourable currency tailwinds.
The note comes amid a broader downturn in global gaming stocks, with the FTSE All-World Gaming Index down roughly 8 per cent year-to-date. Nintendo shares have fallen 12 per cent over the past six months, while Sony has dropped 9 per cent. Capcom, however, has outperformed, rising 4 per cent over the same period. Goldman Sachs argues that the sell-off has created an attractive entry point for long-term investors.
Goldman Sachs analysts wrote that Nintendo's 'vast library of iconic characters and its pivot towards mobile and theme park licensing' positions it well for sustained revenue growth. For Sony, the bank pointed to its 'dominant console ecosystem and expanding first-party game studio output' as key drivers. Capcom, best known for the Resident Evil and Monster Hunter franchises, was praised for its 'disciplined release schedule and high-margin digital sales.'
The recommendations arrive as the Japanese yen remains weak against the pound, making Japanese equities cheaper for UK-based investors. However, currency fluctuations can also erode returns when profits are repatriated. The FTSE 100 closed at 7,612.34 points on Tuesday, down 0.3 per cent, while the Nikkei 225 fell 0.6 per cent to 33,445.21.
Analysts at other houses have offered mixed views. Some caution that the videogame industry faces headwinds from rising development costs and a slowdown in post-pandemic consumer spending. 'The sector is not without risk,' said one London-based tech analyst. 'But for those willing to take a long view, these three names offer the strongest moats.'
Source: Goldman Sachs research note