An attendee uses a Sony PlayStation virtual reality headset and controllers at the Game Developers Conference in San Francisco on March 20, 2019. David Paul Morris | Bloomberg | Getty Images

Shares of Japanese conglomerate Sony surged on Friday after the company announced a share buyback of more than $1 billion and a partnership with a major gaming competitor. By the end of the trading day in Tokyo, Sony's stock soared 9.89%, soaring to levels not seen since December 2018. The jump followed the company's Thursday announcement that it would repurchase up to 4.8% of the total number of shares issued — worth up to 200 billion yen (approx. $1.82 billion). The buyback period will last from May 17, 2019 to March 31, 2020.

"The company is now able to both invest in growth and provide shareholder returns as the level of free cash flow created from businesses increases, and this gives a favorable impression," Yu Okazaki, an analyst at Nomura, wrote in a note. The latest developments follow Sony's first ever share buyback in February.

Microsoft partnership

The gaming powerhouse also announced a new partnership with competitor Microsoft on Thursday, with Sony set to use Microsoft's Azure cloud services for streaming games and media. One analyst called the partnership a "significant development for the shape and competitive dynamic" of the video game industry. "Recent announcements and market acquisitions from Microsoft, Amazon, Google and Tencent highlight that the next competitive dynamic of the games sector is centered on the cloud," said Piers Harding-Rolls, a director and head of games research at IHS Markit. "Companies with access to cloud infrastructure, with a scaled and efficient service delivery capability are well positioned to succeed in this next wave of disruption in the games industry." The deal is in its early stages, with many specifics yet to be determined. But the owners of two major consumer interactive entertainment franchises would collaborate to stream games and content to consumers and offer game makers new development tools. Sony and Microsoft, along with Nintendo, have long dominated the video game console space.