Key insights
- Nintendo's stock fell 10% after earnings due to its avoidance of AI integration, while Sony's stock rose slightly due to its AI initiatives. Sony is investing in AI chip development and plans to use AI to reduce game creation costs. The market appears to be rewarding companies with an "AI story," suggesting a potential shift in investor preference towards AI-focused companies, which may positively influence US equities in the tech sector.
Both Nintendo and Sony released earnings today. Nintendo got crushed, stock down 10% today, while Sony is up slightly. Both gaming companies got hit by AI memory shortage (temporary supply shock), and both had to raise console prices. But interesting thing is that both gaming companies approached AI differently. Nintendo is steadfastly avoiding AI integration, and wants to rely solely on traditional human creative process. Meanwhile, Sony brought out the head of PlayStation on the earnings call, and discussed how they want to use AI to lower gaming creation cost, while keeping humans at heart of content creation (Sony also argues AI can't replace human creativity).
Sony is also leaning into AI chip development, and announced a new TSMC JV to make AI chips for Physical AI (robots and self-driving cars) with their CMOS image sensors tech. If you don't know what this AI chip does, you can find an interesting explanation on YouTube, just search 'chip stock investor Sony' on YouTube.
Seems like in today's market, companies that don't have an "AI story" is going to get punished or simply left behind by investors, especially if they are affected by the memory shortage.