Summary A sharp market selloff linked to AI disruption fears has wiped out nearly US$1 trillion in software stock value within days, as investors worry that artificial intelligence is starting to replace core business models , not just hype future growth. What’s Driving the Selloff Unlike past AI pullbacks driven by valuation concerns, this rout is fuelled by real-world evidence that AI tools may soon displace entire categories of software jobs and services . The trigger was Anthropic’s launch of an AI legal tool , which reignited fears that AI could rapidly move beyond coding into legal, sales, marketing, and finance functions . Key Market Impacts Nearly US$1 trillion wiped out from software stocks tracked by an iShares ETF in just seven days Software stocks at the epicentre , but selling has spread to hardware, services, lenders, and private equity Over US$17.7bn of US tech loans now trade at distresse...
Sony Group Corp shares jumped nearly 6% after the Japanese conglomerate delivered a surprise profit rebound and lifted its full-year earnings outlook, easing investor concerns over rising costs and margin pressure.
Sony now expects operating profit of ¥1.54 trillion for the financial year ending March, up from its earlier forecast of ¥1.43 trillion. In the December quarter, operating income climbed 22% to ¥515 billion, beating market expectations, while revenue edged up 1% to ¥3.71 trillion.
The upbeat results were driven largely by resilient demand for entertainment content, particularly in gaming and music. The PlayStation segment benefited from strong software releases, including Battlefield 6, Call of Duty: Black Ops 7, and Sony’s own Ghost of Yōtei. Software sales rose to 97.2 million units, while PlayStation 5 console shipments reached 8 million units during the quarter.
However, Sony flagged that profitability in the games and networking division weakened, largely due to higher hardware costs, reflecting broader industry pressures from rising component prices.
Beyond gaming, music streaming and live events continued to deliver steady revenue, while Sony’s image sensor business posted around 20% revenue growth, supported by solid mobile demand. That said, the company warned that a global memory-chip shortage could cloud the outlook for smartphone-related components.
Analysts said the results came as a relief after Sony shares had been under pressure from fears over escalating costs, particularly for DRAM and other memory components. Sony’s diversified content portfolio helped cushion margin headwinds, reinforcing management’s strategy to reduce reliance on lower-margin hardware.
Strategically, Sony continues to reshape its business mix. The company recently announced plans to spin off its television business, including the Bravia brand, into a joint venture majority-owned by TCL Electronics, as part of efforts to sharpen focus on higher-return segments.
Quick Summary
Operating profit forecast raised to ¥1.54 trillion
Q3 operating income up 22%, beating expectations
Gaming and music drove earnings resilience
PS5 sales hit 8 million units in the quarter
Hardware costs pressured gaming margins
Image sensors revenue up ~20%
Key Points
Sony surprised markets with a strong profit rebound
Full-year guidance upgrade boosted investor confidence
Content strength offset rising component and hardware costs
Business portfolio reshaping remains ongoing
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