By Shares of video game companies are soaring past the broader stock market in 2025 as investors anticipate some high-profile software and hardware releases in the year.
The Global X Video Games & Esports ETF has surged 12% year-to-date, quadrupling the S&P 500’s 3% return over the same period.
US-listed shares of Japan-based Nintendo have led the charge, surging 23% year-to-date. The gain has mainly been driven by the recent unveiling of its next-generation console, the Nintendo Switch 2, which is expected to be released in time for the holiday season.
With Nintendo’s current console approaching its eighth birthday in March, pent-up demand from consumers is expected to be so high that Nintendo has said it probably won’t be able to keep up.
Nintendo president Shuntaro Furukawa said the company is “taking risks and proceeding with production so that we can meet as much demand as possible,” according to a translation of the company’s earnings call last week.
Analysts at JPMorgan said the expected backward compatibility of the Nintendo Switch 2 should enable Nintendo to sell vastly more software titles than it was able to do with the original Switch console.
JPMorgan estimates Nintendo will sell 190 million software units in the company’s fiscal year 2025, with that figure ballooning to 272 million by its fiscal year 2029.
“We expect software sales volume to grow with help from 1) the introduction of partial forward compatibility for select titles and 2) backward compatibility,” JPMorgan said in a report last month.
For Take-Two Interactive, the software developer’s 16% rally to record highs this year was reinforced by the company confirming last week that it remains on track to release its highly-anticipated Grand Theft Auto 6 later this Fall.
Analyst expectations are high considering that its predecessor, Grand Theft Auto 5, is the third best-selling video game of all time, with 210 million copies, behind Minecraft’s 300 million units and 520 million copies of Tetris, according to data from Gamespot.
Like the Nintendo Switch, the last Grand Theft Auto game was released about 12 years ago, and pent-up demand for the title is high. Analysts at Ned Davis Research said they believe the game could sell 250 million units over its lifetime.
Another video game stock that has surged this year is China-based software developer NetEase, which developed the popular Marvel Rivals game. The game allows users to play more than 30 different Marvel characters in a team-based combat.
For NDR analysts, the upside move in the video game sector has been unsurprising. The research firm recommended investors buy video game stocks late last year, in part due to the anticipation of strong demand for the Nintendo Switch 2 and the “800-pound gorilla” that is Grand Theft Auto 6.
“New titles for 2025 — especially Grand Theft Auto VI — and the release of the Nintendo Switch 2 should ensure that a sales growth bottom is in for the industry,” NDR said in December.
Video game outperformance is also stark relative to other forms of media.
While video game companies are starting to see their fortunes turn after a slowdown in the industry, companies in the film industry are still struggling.
Shares of Warner Bros. Discovery, Disney, and Paramount Global have languished this year. Warner Bros. Discover and Disney shares are down 5% and 2%, respectively, while Paramount stock is up just over 1%.
