Take-Two’s Strong Results Overshadowed by AI Disruption Fears

Take-Two US8740541094

Despite reporting quarterly figures that surpassed expectations and raising its annual guidance, Take-Two Interactive Software's stock has faced significant selling pressure. The decline appears linked not to the company's performance, but to broader sector anxiety triggered by a recent artificial intelligence announcement from Google.

For its third fiscal quarter ending December 31, 2025, Take-Two reported Net Bookings of $1.76 billion, exceeding its own forecast range. On a GAAP basis, the company announced revenue of $1.7 billion, representing a 25% year-over-year increase.

Management responded to the strong quarter by raising its full-year outlook for fiscal 2026. The company now anticipates Net Bookings between $6.65 billion and $6.7 billion, which would equate to approximately 18% growth compared to the prior year. The forecast for operating cash flow was also lifted to around $450 million.

Key drivers for the quarter included the enduring strength of major franchises and recurring revenue streams:
* Performance from the Grand Theft Auto series was noted as being "significantly" above expectations. The number of GTA+ subscriptions is reported to have nearly doubled year-over-year, while lifetime sales for GTA V have now surpassed 225 million units.
* NBA 2K26 sold approximately 8 million units, with player recurrent spending growing by 30%.
* Within the mobile segment, Toon Blast saw bookings grow by 43% and has now generated lifetime Net Bookings exceeding $3 billion.

A critical metric for investors, Recurrent Consumer Spending, climbed 23% and accounted for 76% of total Net Bookings.

The AI Catalyst: Google's Project Genie

The positive operational news was quickly eclipsed by a sector-wide sell-off initiated by Google's late-January unveiling of Project Genie. Developed by DeepMind, this AI technology can generate interactive virtual environments from simple text prompts.

The market's concern centers on the potential for such tools to fundamentally alter game development processes, software tools, and value creation across the industry. This sentiment affected numerous gaming stocks, with Take-Two's shares declining 22.94% over the past 30 days (as of Friday, February 6, 2026).

Leadership Response and the GTA VI Horizon

Take-Two's executive team addressed the AI concerns directly. CEO Strauss Zelnick argued that powerful development tools are not equivalent to owning valuable intellectual "Properties"—established brands, content, and franchises. He noted the company is running "hundreds" of AI pilot projects and views the technology primarily as a tool for enhancing efficiency and creativity. President Karl Slatoff added that comparing Project Genie to traditional game engines is an oversimplification, stating it does not replace the creative process itself.

Concurrently, the company reaffirmed the launch schedule for Grand Theft Auto VI, stating the release remains on track for November 19, 2026, with a marketing campaign set to begin this summer. Zelnick expressed confidence, indicating that approaching marketing milestones typically reflect internal confidence in the project's timeline—a notable point given the title's history of delays.

However, the financial picture includes continued heavy investment. For the recent quarter, Take-Two posted a net loss of $92.9 million. For the full 2026 fiscal year, management expects a net loss in the range of $338 million to $369 million (or $1.84 to $2.00 per share).

The current situation presents a clash of narratives: improving fundamentals and a clear roadmap for GTA VI versus emerging AI technologies that are prompting short-term questions about valuation and business models across the gaming sector. The impending summer marketing push for GTA VI is likely to shift investor focus back to Take-Two's ability to execute on its promises.