By Angela Palumbo

An array of videogame industry news this week helps paint a picture for investors on what stocks could be attractive over the long run as the space grows increasingly uncertain in the near term.

Videogame stocks have been in hot water recently. Volatility in the space just intensified as investors and customers alike got hit with quite a bit of industry updates over the past few days.

Epic Games announced on Tuesday that it was laying off over 1,000 employees following a downturn in Fortnite engagement that started in 2025, leading to the company spending "significantly more," than it's making. Take-Two Interactive Software shares fell 4.7% that day as the news rattled already fragile videogame investor sentiment.

Sentiment has been shaken by the emergence of improving artificial intelligence models. Alphabet announced the availability of Project Genie in January, an AI-based tool that can give users the ability to create fully rendered three-dimensional worlds. This announcement led to concerns about the impact artificial intelligence will have on the future of videogame development.

Take-Two management said on its last earnings call that Genie technology could be a useful tool for creators. Still, shares have dropped 26% this year. That could provide an exciting opportunity for an investor looking to get in on a stock that might get a boost from the launch of one of the most highly anticipated game releases ever: Grand Theft Auto VI.

"Investors are excited about GTA VI. They want a reason to be more excited and they want additional confidence in the fact that the game is going to launch -- they don't want another delay. So my bias is as we hear more noise around GTA 6, shares will begin to bounce back," Nick McKay, videogaming and digital entertainment analyst at Freedom Capital Markets, told Barron's.

AI concerns have also been a problem for Unity Software stock, which has tumbled 58% this year. But shares popped on Friday after the videogame software developer gave a better-than-expected preliminary revenue forecast for the first quarter on Thursday night. Bullish analysts, including William Blair's Dylan Becker, think Unity stock can continue its momentum higher.

"The company is well positioned to capitalize on multiple industry tailwinds contributing to a large and growing overall market with a unique competitive advantage afforded by contextual data on more than four billion monthly active users and more than 70% of all mobile games being built on the company's platform," Becker wrote on Friday. He rates the stock as Outperform without a price target.

It's more than just AI headwinds impacting the videogame space. Memory costs have rattled tech companies as demand outpaces supply due to the rising need for the hardware that powers AI. These higher costs are pressuring margins for hardware makers.

Sony announced on Friday that it is raising the price of the Play Station 5. The base console and digital edition will cost $100 more starting April 2, while the PS5 Pro will cost $150 more. While management didn't confirm the decision was due to memory costs, the company said in a blog post that it's facing "continued pressures in the global economic landscape."

Investors eyes now turn to Nintendo. The company hasn't raised the price of its consoles, but it also hasn't shut down the idea. Nintendo president Shuntaro Furukawa said at a financial results briefing in February that while no decision has been made yet, "any decision to change the price will be determined comprehensively, taking into consideration not only profitability, but also other factors like the platform's installed base, sales trends, and the market environment."

Switch 2 demand is already in question. Bloomberg reported on Monday that Nintendo plans to make four million units of the Switch 2 this quarter, a third less than the six million it had originally planned to produce, citing people familiar with the matter. Nintendo didn't respond to a request for comment regarding the report.

The company needs to get people excited about game releases to convince them to buy the console, but McKay tells Barron's that hasn't happened yet.

"There haven't been as many must have Switch 2 exclusives as you'd hope right now, and so you're bouncing that in your head against the potential for Nintendo to have to increase prices," he said.

Japanese shares of Nintendo have fallen 13% this year. However, the company announced on Wednesday that new digital games exclusive to the Switch 2 will be less expensive than physical copies. That could help spur sales of digital games, which are higher margin for Nintendo than physical copies.

"The cost of physical games is not going up. This means that when Nintendo sells digital versions of Nintendo published games exclusive to Nintendo Switch 2 to consumers in the U.S., those prices will have an MSRP that is lower than their physical counterparts. Retail partners set their own prices for physical and digital games, and pricing for each title may vary," Nintendo of America told Barron's.

The company also said earlier this month that sales of its latest Switch 2 release, Pokémon Pokopia, surpassed 2.2 million units in the first four days since its launch on March 5.

Nintendo also has The Super Mario Galaxy Movie release on April 1, which could lead to improved merchandise, or even Switch 2 console sales.

"I still think over the long term that Nintendo is in potentially a better position than Sony and Microsoft, because once they get past this memory pricing issue -- hopefully that happens relatively soon -- and once they start releasing more high-profile Switch 2 exclusives, I think they're in a very good spot," McKay said. He rates Nintendo as a Buy with a Yen11,500 price target.

The waterfall of videogame news this week highlights how volatile the environment is right now. Investors might want to use this time to pause and keep an eye on long-term opportunities to play this currently rocky space.

Write to Angela Palumbo at angela.palumbo@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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March 28, 2026 04:00 ET (08:00 GMT)

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