The most-anticipated video game release in years headlines the 2025 outlook for the sector. Excitement for "Grand Theft Auto 6" from Take-Two Interactive Software has driven TTWO stock higher recently.
"Take-Two's 'GTA 6' is poised for a blockbuster second-half 2025 release, with 45 million units expected (to be sold) in the launch window," BMO Capital Markets analyst Brian Pitz said in a client note Tuesday.
"GTA 6" could become the highest-grossing video game of all time, Pitz said. The game is due out next fall, he said.
The video game industry overall is likely to grow at a compound annual rate of just 4.4% for the next three years, Pitz said. But largest publishers, including Electronic Arts, Roblox, Take-Two and Ubisoft, are positioned to gain market share, he said.
Pitz rates TTWO stock as a "top pick" in the video game space heading into 2025. He has a price target of 240 on Take-Two stock.
On the stock market today, TTWO stock dipped 0.7% to close at 185.93.
On Nov. 7, TTWO stock broke out of a 39-week consolidation pattern at a buy point of 171.59, according to IBD MarketSurge charts. Take-Two rallied after its better-than-expected fiscal second-quarter report.
TTWO Stock Counting On Hit Game
"GTA 6" needs to be a hit for Take-Two, given how expensive it was to produce, Benchmark analyst Mike Hickey said in a client note.
"'GTA 6' is rumored to be the most expensive video game ever developed, with alleged development costs ranging from $1 billion to $2 billion," Hickey said. "This figure would surpass the budgets of other major titles like 'Destiny' ($500 million), 'Cyberpunk 2077' ($330 million), and 'Modern Warfare 2' ($310 million). By comparison, 'GTA 5' cost $250 million but generated over $1 billion in revenue within three days of launch."
He added, "If accurate, 'GTA 6''s budget reflects its potential as the most ambitious game ever, fueled by over a decade of development and massive anticipation following a 2023 teaser trailer."
Hickey rates TTWO stock as buy with a price target of 210.
Other major titles coming next year from Take-Two include "Borderlands 4," "Mafia: The Old Country" and "Sid Meier's Civilization 7."
New Console Coming From Nintendo
Another major event for the video game sector is the predicted launch of Nintendo's next game console, the Nintendo Switch 2, BMO's Pitz said. The other console makers, Microsoft and Sony, aren't expected to release new hardware until 2026 at the earliest.
In its annual report and forecast for the video game industry, DFC Intelligence said, "2025 is expected to see the launch of two of the biggest products ever: a new Nintendo system and 'Grand Theft Auto 6.'"
DFC Intelligence notes that there hasn't been a new console launched since 2020. The digital media research firm argues that there's a "pent-up demand" for new hardware.
Take-Two ranks fifth out of 21 stocks in IBD's Computer Software-Gaming industry group, according to IBD Stock Checkup. TTWO stock has an IBD Composite Rating of 55 out of 99.
Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
