Sony raised sales guidance for the full year Thursday and posted operating profit that smashed analyst expectations after a strong quarter for its gaming business.

Here’s how the company did in the September quarter, versus LSEG consensus estimates:

• Revenue: 2.97 trillion Japanese yen ($19.4 billion), versus 3.03 trillion yen expected. That was up 9% and slightly below analyst expectations.
• Operating profit: 445.1 billion yen ($2.91 billion), versus 336.07 billion yen expected. That’s up 73% year-over-year and beats expectations.

The Japanese tech giant revised its fiscal year 2025 revenue target up slightly to 12.7 trillion yen. It previously targeted 12.6 billion yen of sales. Sony also expects full-year operating profit of 1.3 trillion yen, in line with its previous forecast.

That came as Sony saw strength in its game and network services division, which houses its popular PlayStation home console brand. Game and network services revenue at the company came in at 1 trillion yen, up 11% year-over-year.

Sony’s gaming division has held up well thanks to a shift to digital game purchases and the PlayStation Plus subscription service. However, hardware shipments have proven lackluster amid a weak console market beset by a lack of hyped up triple-A games.

Analysts expect things to improve next year for the gaming sector, though — not least thanks to the anticipated launch of a next-generation Nintendo Switch model and the release of Grand Theft Auto VI.

Sony said it sold 3.8 million PlayStation 5 units for the September quarter, down 22% year-over-year. Still, the firm saw a 28% jump in game software sales for the three-month period, to 612.3 million yen.

On Thursday, Sony launched its upgraded PlayStation 5 Pro console, touting a better graphics card allowing for faster gameplay rendering and new artificial intelligence capabilities to upscale graphics with sharper image clarity.

Analysts hope that the launch will boost interest in the PS5 with a souped-up piece of hardware ready for release of GTA VI, one of this decade’s most hotly anticipated games.

Correction: This story has been updated to reflect that operating income jumped 73% year-over-year in the September quarter.

Samsung Electronics was once the dominant player in a type of semiconductor known as memory, putting it in a great position to capitalize on the boom of artificial intelligence.

But the South Korea electronics giant has now fallen behind its long-time rival SK Hynix in next-generation chips that have been key component for AI silicon leader Nvidia. The result? Samsung’s profit has plunged, around $126 billion has been wiped off its market value, according to data from S&P Capital IQ, and an executive issued a rare public apology about the company’s recent financial performance.

Memory is a critical type of chip used to store data, and it can be found in a plethora of devices from smartphones to laptops. For years, Samsung was the undeniable leader in this technology, ahead of South Korean rival SK Hynix and U.S. competitor Micron.

But as AI applications such as OpenAI’s ChatGPT rose in popularity, the underlying infrastructure required to train the huge models they rely on became a bigger focus. Nvidia has emerged as the top player in this space with its graphics processing units (GPUs) that have become the gold standard used by tech giants for AI training.

A crucial part of that semiconductor architecture is high-bandwidth memory, or HBM. This next generation of memory involves stacking multiple dynamic random access memory (DRAM) chips, but it had a small market before the AI boom.

That’s where Samsung got caught out and failed to invest.

“HBM has been a very niche product … for a long time and Samsung has not focused its resources on its development,” Kazunori Ito, director of equity research at Morningstar, told CNBC by email.

“Due to the difficulty of the technology involved in stacking DRAMs and the small size of the addressable market, it was believed that the high development costs were not justified.”

SK Hynix saw this opportunity. The company aggressively launched HBM chips which were approved for use in Nvidia architecture and, in the process, the South Korean firm established a close relationship with the U.S. giant. Nvidia’s CEO even asked the company to speed up supply of its next generation chip, underscoring the importance of HBM to its products.

SK Hynix posted record quarterly operating profit in the September quarter.

“With strong R&D (research and development) investments and established industry partnerships, SK Hynix maintains an edge in both HBM innovation and market penetration,” Brady Wang, associated director at Counterpoint Research, told CNBC by email.

Samsung told CNBC that, in the third quarter, total HBM sales grew more than 70% quarter-on-quarter. The tech giant added that the current product known as HBM3E is in mass production and generating sales.

The South Korean tech company noted that development for its next-generation HBM4 is “underway according to plan” and that the company is targeting starting “mass production” in the second half of 2025.

AppLovin shares soared 45% on Thursday after the online gaming and advertising company issued guidance that was well above estimates and reported better-than-expected earnings and revenue.

The stock jumped past $245 in early afternoon trading. It’s now up 515% this year, far outpacing all other tech companies valued at $5 billion or more, according to FactSet data. The rally has lifted AppLovin’s market cap to over $80 billion.

Revenue in the third quarter climbed 39% to $1.2 billion, topping the $1.13 billion average estimate, according to LSEG. Earnings per share of $1.25 exceeded the 92-cent average estimate.

For the fourth quarter, AppLovin sees revenue of $1.24 billion to $1.26 billion, representing growth of about 31% at the middle of the range. Analysts were expecting about $1.18 billion.

Founded 12 years ago, AppLovin went public in 2021, riding a Covid-era wave of excitement in online games. Now, the company’s games unit generates relatively slow growth, but its online ad business is bustling from advancements in artificial intelligence that have improved ad targeting.

AppLovin attributes much of its growth to its AI advertising engine called AXON, particularly since releasing the updated 2.0 version last year. The technology helps put more targeted ads on the mobile gaming apps the company owns, and it works for other studios that license the software.

The company said software platform revenue in the quarter increased 66% to $835 million, driven by improvements in AXON’s models.

“As we continue to improve our models our advertising partners are able to successfully spend at a greater scale,” the company said in a letter to shareholders.

While revenue is increasing at a rapid rate, Wall Street is most attracted to AppLovin’s profitability. Net income in the quarter increased 300% to $434.4 million, or $1.25 a share, from $108.6 million, or 30 cents a share, a year earlier. The software platform had an adjusted profit margin of 78%.

“AppLovin continues to impress with outsized revenue growth and incredible EBITDA conversion,” analysts at Wedbush wrote in a report on Thursday. They recommend buying the stock and increased their price target from $170 to $270.

AppLovin CEO Adam Foroughi, whose net worth swelled on Thursday by more than $2 billion to about $7.4 billion, provided an update on the company’s pilot e-commerce project. The technology allows businesses to offer targeted ads in games.

“In all my years, It’s the best product I’ve ever seen released by us, fastest growing, but it’s still in pilot,” Foroughi said on the earnings call. E-commerce “is looking so strong that it’s something that we think will be impactful to the business financially in 2025 and then for the long-term.”

— CNBC’s CJ Haddad contributed to this report

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