Computer game stocks get hot

Titles are hit-or-miss, but you must play to win

- John Shinal @johnshinal Special for USA TODAY

Amazon wasn’t the only technology stock to outshine the broader market for tech shares during the past three months.

U.S. investors also hit the “play” button on shares of companies that get all or most of their revenue from the computer-games business.

Sony, Activision Blizzard, Electronic Arts and Net-Ease all posted market-trouncing returns for the second quarter, a period when the Nasdaq was essentiall­y flat.

So did shares of Nvidia, whose graphics chips are used in powerful computers favored by gamers.

The question now for momentum investors is how far the stocks can run, as these issues tend to be volatile.

Sony, for example, surged from $16 a share to $32 last year before diving back to $20.

Still, for investors who can stomach such swings, their recent momentum is worth a look.

Wall Street expects all five of these companies to post healthy revenue growth during their cur- rent fiscal years.

The popularity of gaming has grown so great that it has spawned profession­al leagues and TV networks dedicated to showing their contests.

Meanwhile, the proliferat­ion of consumer game platforms — from smartphone­s to homemedia consoles to virtual-reality headsets — is generating an explosion of new titles.

As usual, momentum investors want in on the action.

Activision Blizzard and Electronic Arts, two of the largest game developers by market cap, saw their stocks surge 17% and 14.5%, respective­ly, during the second quarter.

Nvidia shares leapt 32% while China-based NetEase, which hosts online games and other consumer Internet services, gained the most with a 35% surge.

Sony rose 14% after it reported a full-year profit in April — reversing two years of losses — due to sales of more than 17 million units of its latest game console, the PlayStatio­n4.

This bullishnes­s came during a quarter when most of the largest large-cap tech names saw their shares fall.

The surge means these companies are now among the 50-most valuable tech firms to trade in U.S. markets.

The optimism for gaming stocks also extended into Europe.

That’s where shares of Francebase­d Ubisoft Entertainm­ent jumped 17% on the Paris exchange in the second quarter.

The global games business is like Hollywood, in that it’s hit-ormiss, which helps explain the volatility of these stocks.

While NetEase shares gained the most in the second quarter, for example, they started 2016 with a 25% plunge.

But for aggressive investors discipline­d enough to buy on dips and take profits on price surges, there’s a case to be made for computer game stocks.

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