Nintendo Shares Slide Amidst Memory Chip Shortage and Switch 2 Launch Concerns
Nintendo Co. experienced a significant drop in its stock price, falling over 10% on Wednesday. This downturn followed the company’s announcement of quarterly revenue that fell short of market expectations, compounded by challenges posed by an unprecedented shortage of memory chips. Despite missing revenue targets, Nintendo did surpass profit estimates, reporting a robust 24% year-on-year increase. This profit growth was largely attributed to the sustained popularity of its Nintendo Switch, a console that has become the company’s best-selling hardware since its debut in 2017. Overall revenue saw a substantial jump of 86%.
The gaming titan is currently navigating a difficult landscape due to a global scarcity of memory chips, a critical component for its gaming consoles, which has led to escalating prices for these essential parts. Andrew Jackson, Head of Japanese Equity Strategy at Ortus Advisors, noted that investor sentiment remains apprehensive regarding the potential impact of rising memory costs on Nintendo’s profit margins.
While Nintendo President Shuntaro Furukawa indicated that the current financial year’s results have not been significantly affected by memory price increases, he cautioned that prolonged high component costs could indeed impinge on future profitability. Nintendo predominantly utilizes dynamic random-access memory (DRAM) in its consoles, a type of memory that is currently in tight supply due to surging demand from artificial intelligence initiatives and the expansion of data center infrastructure.
Market research firm TrendForce projects that contract prices for conventional DRAM chips in the first quarter of the current year will surge by 90% to 95% compared to the preceding three-month period. Adding to these concerns, a prominent semiconductor industry CEO recently informed this publication that the memory chip shortage is anticipated to persist through 2027.
“If the current trend in the memory space continues, I would not be surprised at all to see Nintendo raising prices,” stated Serkan Toto, CEO of game consultancy Kantan Games, via email. He further elaborated that given the Switch 2’s already premium price point, any further increases could prove challenging for Nintendo’s predominantly casual user base. The Switch 2, launched last June, now represents the largest portion of the company’s console sales.
Beyond the memory crunch, analysts highlight ongoing investor unease surrounding the performance trajectory of the Switch 2. This sentiment persists even as Nintendo reaffirmed its full-year sales forecast for the console.
“The primary concern appears to be momentum; the first year is absolutely critical for every new console,” Toto observed. “In that sense, Nintendo is a victim of its own success, as the Switch 1 experienced a stellar first 12 months post-launch, which is a difficult benchmark to replicate today.”
Nintendo’s capacity to recapture that initial launch momentum will likely hinge on the strength of its upcoming Switch 2 game portfolio and its ability to incentivize consumers to transition to the new hardware. The company has slated key releases for early 2026, including “Mario Tennis Fever” in February and “Pokémon Pokopia” in March, both drawn from its most popular franchises.
Furthermore, “The Super Mario Galaxy Movie” is scheduled for an April release. The success of the 2023 Super Mario movie provided a considerable uplift to Nintendo’s console sales, and the company is undoubtedly hoping for a similar synergistic effect on the Switch 2.
James McWhirter, a senior analyst at Omdia, recently described 2026 as a “make-or-break” year for the Switch 2’s long-term prospects, particularly as Nintendo aims to broaden its appeal to a more mainstream audience.
Year-to-date, Nintendo’s shares have declined by over 15%.
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