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Video game stocks will rise sharply in 2025 amid a slew of big releases, says Ned Davis Research.
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Grand Theft Auto VI and the Nintendo Switch 2 are expected to drive revenue growth for the industry.
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NDR suggests investing in Global X Video Games & Esports ETF for sector exposure.
According to Ned Davis Research, video game stocks are poised to soar in 2025 ahead of a huge slate of blockbuster releases.
The company started the video game theme at “overweight” for 2025, predicting a 22% rise versus the S&P 500 in the coming year.
“New titles for 2025 – especially Grand Theft Auto VI – and the release of the Nintendo Switch 2 should ensure there is a bottom in revenue growth for the industry,” NDR said in a recent note.
The research firm highlighted upcoming game releases including Assassin’s Creed Shadows, Monster Hunter Wilds, Fable 4, Borderlands 4 and Take-Two’s Grand Theft Auto VI, which are expected to release before the 2025 holiday shopping season.
NDR noted that the S&P 500 is up 27% since the end of 2021, compared to a gain of just 7% for the thematic video game index. The research firm now expects it to catch up, as signals indicate that profit margins have bottomed out.
The company highlighted that video game companies across the board have reduced their workforces in 2024 after weak sales following the pandemic.
“One of the most optimistic things a company can do in a recession is to reduce fixed costs so that when sales recover, operating leverage leads to significant profit growth,” NDR said. “The layoffs form the basis for margin improvement.”
Additionally, NDR said the adoption and use of AI in the video game industry has the potential to reduce game development costs.
In terms of a sales recovery in 2025, NDR said it expects a big recovery thanks to the “800 pound gorilla” that is Grand Theft Auto VI, “which could sell 250 million copies over its lifetime,” according to NDR.
That’s based on the fact that Grand Theft Auto 5 is the second best-selling video game of all time. The fact that it was released over 11 years ago means that the appetite for the next installment is high among gamers.
Finally, the Nintendo Switch 2 is expected to release next year, which will once again be a catalyst for a sales increase. The release would take place about eight years after the debut of the first Nintendo Switch, and Nintendo “will almost certainly support it with new video game releases,” the research firm said.
The company recommends that investors gain exposure to the sector through the Global
“We are overweight HERO versus SPY with a 22% relative return over one year,” NDR said.
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