Investment bank JP Morgan has reaffirmed its positive outlook for casino equipment and gaming technology supplier Light & Wonder Inc, citing supportive industry fundamentals, artificial intelligence (AI)-driven product development, and the supplier’s reaffirmed fiscal 2026 guidance.
In a mid-year gaming and leisure report published on Thursday, the brokerage noted that the market’s expectations currently were below Light & Wonder’s guidance for mid- to high-single-digit growth this year in its adjusted earnings before interest, taxation, depreciation, and amortisation (EBITDA).
But JP Morgan said that resilience in U.S. land-based gaming revenue and continued strong growth in U.S. iGaming tended to support Light & Wonder’s guidance on its adjusted EBITDA.
Light & Wonder has three main segments: land-based gaming; the digital games unit SciPlay; and iGaming.
JP Morgan said AI integration should help accelerate product development and the commercialisation of new games, supporting further margin expansion.
While the institution acknowledged ongoing concerns over the company’s post-Dragon Train product pipeline, it said AI improved confidence in Light & Wonder’s ability to develop new “successful” game franchises.
The brokerage also noted that operational efficiencies from porting graphics and gaming platforms had yet to be fully reflected in market expectations.
Analysts Don Carducci and George Stewart said their investment thesis regarding Light & Wonder was based on four key factors: reduced earnings risk following the company’s reaffirmed fiscal 2026 guidance; supportive industry dynamics with a pathway for further growth; AI’s potential to speed product development and commercialisation; and what they viewed as an attractive valuation relative to peers and historical levels.
The brokerage also highlighted Light & Wonder’s transformation into a more focused gaming business following the divestment of its lottery and sports betting operations.
It said the streamlined structure had strengthened free cash flow generation and enabled a more targeted research and development programme centred on the company’s remaining business segments.
