Electronic Arts: a winning game group
Electronic Arts is a fast-growing video-game maker which looks set for further success


Video games are one of the most rapidly expanding forms of entertainment. Thanks to improving technology, today’s games are far more immersive than they were even a decade ago, which helps them compete with alternative forms of entertainment, such as television. The demographics of gaming are changing; middle-aged people who grew up with computer games still enjoy them. Throw in new technologies, such as virtual reality (VR) and the advent of eSports, and it’s no wonder a recent report by consultancy PwC estimated that the sector’s total revenue will exceed $300 billion by 2028. One company already benefiting from this is Electronic Arts (Nasdaq: EA).
Electronic Arts is one of the largest video-game studios. It is involved with some of the biggest franchises in the industry. These include the Battlefield and Sims series of games, as well as Sports FC and various other sports franchises, such as the Madden series. While people can still buy individual games, EA also offers a subscription service whereby people can access a library of EA’s top titles for a monthly or yearly fee. Combined with the ability to purchase additional features for each title, such as extra stadia or team uniforms in its sports games, this gives Electronic Arts a recurring income stream.
Electronic Arts is fending off rivals
Costs are rising along with sales as gamers are demanding increasingly lavish spectacles. Any missteps can therefore have a significant impact on the bottom line, as EA found to its cost earlier this year after some of its latest games were less successful than initially expected, causing its share price to fall by 20%. On the plus side, however, rising costs are making things harder for smaller studios, with some closing down and others being taken over. Combined with EA’s strong, recognisable brand, this provides a degree of protection from competition.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
EA’s revenue has grown by more than a third over the last five years, with adjusted profits going up by more than 50% since 2021. Revenue is expected to keep expanding by 5% a year over the next two years, with profits more than doubling during the same period.
Operating margins remain strong at around 20%, with a return on capital employed of around 17%. EA trades at a very reasonable 17 times forecast 2027 earnings, which is far less than other major games studios, such as Take-Two Interactive, which trades at around 26 times 2027 profits (even though it has had to delay the latest release in its Grand Theft Auto franchise).
EA also looks attractive from a technical perspective, with its share price having recovered from the disappointing start to 2025. Moreover, it is trading above both its 50-day and 200-day moving averages. I therefore suggest going long at the current price of $155, at £19 per $1. In that case, I would put the stop loss at $105, giving a total downside of £981.
This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.

Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.
He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.
Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.
As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.
Follow Matthew on Twitter: @DrMatthewPartri
-
Council tax bills in worst hit areas set to rise by £500 in the next four years
Branded the ‘ultimate stealth tax’, the council tax burden is increasing across the country, with some areas potentially having to find hundreds of pounds more a year to pay the bill
-
Crypto ETNs are approved for UK retail investors
The FCA has approved the sale of crypto ETNs to retail investors from October. What is a crypto ETN, and what does this mean for investors?
-
Global equities that should prove resilient to the stock market’s storms
Opinion Alex Illingworth of Goshawk Asset Management highlights three diverse opportunities in global equities despite a turbulent landscape
-
How to use SAYE and SIP schemes to multiply your money
Employers’ savings or share-incentive plans like SAYE and SIP schemes can help top up your pension
-
Where investors can find value now
Opinion Active fund managers and blue chips on both sides of the Atlantic look appealing, says ByteTree’s Charlie Morris
-
UK equities: where to find a great British bargain
UK equities are staging a comeback, but there’s still plenty of value out there, says Rupert Hargreaves
-
Just Group has the wind behind it – should you invest?
Just Group, a retirement products provider, is well placed to profit from a growing annuity market
-
Personal Assets Trust: a fund to protect your wealth
Personal Assets Trust aims to shelter its shareholders’ assets from volatile markets
-
Britain’s fallen stars: a second chance for quality stocks
Quality stocks in the UK saw share prices collapse in the wake of Covid. That has created an opportunity for smart public investors — and private buyers
-
Microsoft’s partnership with OpenAI is on the rocks
Microsoft’s joint venture with OpenAI, the developer of ChatGPT, appears to be in trouble. What now for the two groups?