Goldman Sachs Upgrades Three Japanese Videogame Stocks Buoyed by Yen
1h ago|4 min readStandard
Fazen Markets Editorial Desk
Collective editorial team · methodology
goldman-sachsjapanese-stocks
Fazen Markets Editorial Desk
Collective editorial team · methodology
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Goldman Sachs has issued a positive assessment of Japan's videogame sector, highlighting Nintendo Co., Ltd., Bandai Namco Holdings Inc., and Square Enix Holdings Co., Ltd. as its top stock picks. The investment bank's analysis, published on June 12, 2026, points to the persistently weak Japanese yen as a primary tailwind for exporters. The yen recently traded at its lowest level against the US dollar since 1990, significantly boosting the value of overseas earnings for these companies. Goldman Sachs' own stock traded at $1,035.64, up 0.35% on the day, as of 07:46 UTC today, with a daily range between $1,000.45 and $1,036.75.
The recommendation arrives as the USD/JPY exchange rate tests multi-decade highs, a consequence of the stark divergence between the Bank of Japan's cautious monetary normalization and the Federal Reserve's prolonged restrictive policy. Historically, Japanese exporters have seen earnings surges during periods of yen weakness. A similar dynamic occurred between 2012 and 2015 under the Abenomics program, where the yen's depreciation contributed to a near-doubling of the Topix index. The current macro backdrop is defined by US 10-year Treasury yields holding above 4.5% and ongoing strength in the S&P 500, which continues to attract capital away from Japanese assets and reinforces dollar strength.
The catalyst for this specific sector focus is the upcoming hardware and software cycle. Nintendo is widely anticipated to announce a successor to its Switch console, potentially as early as the next fiscal year. Bandai Namco and Square Enix are positioned to benefit from a steady pipeline of major franchise releases and growing revenue from high-margin digital and mobile content. The weak yen acts as a powerful amplifier for the profitability of these global sales.
Japanese videogame companies derive a substantial portion of their revenue from overseas. For Nintendo, overseas sales consistently account for over 70% of its total revenue. Bandai Namco's overseas sales ratio has climbed to approximately 45%, while Square Enix's international business represents over 60% of its revenue. Each 1-yen depreciation against the US dollar translates to a multi-billion yen boost to operating profit across the sector.
The performance disparity between a Japan-focused index and a global one highlights the currency impact. Year-to-date, the Nikkei 225 is up approximately 8%, largely supported by export-driven earnings. In contrast, the MSCI World Index, which is less sensitive to yen fluctuations, has advanced roughly 12% over the same period. The following table illustrates the estimated currency sensitivity for the three highlighted firms based on a 1-yen move in USD/JPY.
| Company | Estimated Operating Profit Increase (¥ Billion) |
|---|---|
| Nintendo | 4.0 - 5.0 |
| Bandai Namco | 1.5 - 2.0 |
| Square Enix | 0.8 - 1.2 |
Goldman Sachs' stock price movement, a gain of 0.35%, reflects broader market stability as institutional investors digest sector-specific research.
The primary beneficiaries of this theme are the pure-play exporters with globally recognized intellectual property. Nintendo, with its hardware-software ecosystem, stands to gain the most from both currency translation and a successful new console launch. Bandai Namco's diverse portfolio, spanning video games, toys (Gundam), and amusement facilities, provides resilient earnings streams. Square Enix offers use to the growing global appetite for Japanese RPGs and live-service games.
A key risk to the thesis is a sudden, sharp reversal in the yen. Intervention by Japanese monetary authorities to support the currency remains a possibility, which could temporarily erase the earnings advantage. the analysis assumes continued global consumer demand for gaming content, which could be dampened by an economic slowdown in key markets like North America and Europe. Positioning data indicates that foreign investors have been net buyers of Japanese equities, particularly in the technology and consumer discretionary sectors, signaling agreement with the export-led growth narrative.
The next significant catalyst for the sector is the Bank of Japan's policy meeting later this month, where any hint of accelerated rate hikes could strengthen the yen. Nintendo's next financial results announcement, scheduled for late July, will be scrutinized for any official commentary on its next-generation hardware. Key levels to monitor include the USD/JPY pair holding above 158.00, a critical resistance-turned-support zone that, if breached, could signal a further leg down for the yen. A break below 155.00 would challenge the bullish thesis for exporters.
A weaker yen means that the US dollars and euros these companies earn from overseas sales are converted back into a larger amount of Japanese yen. This currency translation effect directly increases their reported revenue and operating profit without any change in unit sales. For companies like Nintendo, which generates the vast majority of its income outside Japan, this provides a significant, non-operational boost to their bottom line.
Currency markets are highly volatile and can reverse quickly based on central bank intervention or shifts in macroeconomic policy. Investing solely for currency gains exposes an investor to factors beyond a company's operational control. A strengthening yen would act as a headwind, reducing the value of overseas earnings. This is why analysts emphasize companies with strong underlying growth, not just currency benefits.
Goldman Sachs has maintained a generally constructive view on Japanese equities, but this report represents a targeted refinement. It moves beyond broad market calls to identify specific sub-sectors and companies with the highest sensitivity to the prevailing macro theme of yen weakness. The focus on three companies with distinct strengths indicates a belief that the current environment is particularly potent for the gaming industry's earnings potential.
Goldman Sachs sees yen weakness as a powerful catalyst for Nintendo, Bandai Namco, and Square Enix.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.
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