Summary

• Sony's music and image sensor businesses are becoming increasingly important drivers of profitability, reducing reliance on cyclical consumer electronics revenue.
• SONY delivered record operating income in FY2025, supported by margin expansion and strong performance across Music and Imaging & Sensing Solutions.
• Management views memory costs and AI-related concerns as manageable risks already incorporated into planning assumptions through FY2027.
• A sum-of-the-parts valuation suggests Sony's diversified portfolio is undervalued, with approximately 20% upside under a base-case scenario.
• I believe the market continues to value Sony as a consumer electronics company rather than as a diversified entertainment and technology compounder.

Investment Thesis

I assign Sony Group Corporation (SONY) (SONY:CA) (SNEJF) a buy rating because I believe the market currently values the company as a cyclical consumer electronics company as

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