A Super Mario character is pictured at a Nintendo display ahead of the launch of the company’s Switch 2 console, an electronics store in the city of Nagoya, Aichi prefecture on June 2, 2025.
Richard A. Brooks | Afp | Getty Images
Nintendo
shares experienced a significant downturn on Monday following a cautious outlook from the gaming titan, which projected a decline in Switch 2 console sales for the current fiscal year and announced a price adjustment attributed to escalating memory costs.
Nintendo’s stock closed 8.4% lower in Tokyo, trading at 7,020 yen, marking its lowest point since August 2024. Year-to-date, the stock has declined by 34%.
On Friday, Nintendo revealed price adjustments for its Switch 2 console across global markets. This move comes in the wake of an unprecedented surge in memory chip prices, largely fueled by the robust expansion of AI infrastructure, which has directly impacted the manufacturing costs of the device.
Nintendo’s projections indicate sales of 16.5 million Switch 2 units for the current fiscal year, which concludes in March 2027. This figure represents a decrease from the 19.86 million units sold since its launch in June of the previous year. The anticipated dip in sales for a console less than a year old has triggered investor concerns.
“Nintendo is forecasting a decline in Switch 2 hardware sales this fiscal year, which is contrary to the typical upward trajectory observed with new console launches,” Serkan Toto, CEO of Kantan Games, commented to CNBC on Monday. “The primary driver behind this outlook is undoubtedly the price increase, which Nintendo anticipates will lead to softer consumer demand.”
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Nintendo shares since August 2024.
‘Lowballing’ Guidance Amidst Market Uncertainty
Nintendo historically adopts a conservative approach to its financial guidance, a strategy that analysts believe is being employed once again. Toto suggests that the current sales figures are likely understated, anticipating that consumers will adapt to the new console pricing over time.
Kazunori Ito, director at Morningstar, echoed this sentiment in a note on Sunday, characterizing Nintendo’s guidance as “overly conservative.” He stated, “We believe the console price hike was inevitable given the prolonged inflation in memory costs. While the weak shipment guidance likely reflects undue caution on demand, the hike itself was kept modest, and we expect shipments to hold up better than the company anticipates.”
The price increase for the Switch 2 amounted to $50 in the U.S. and 10,000 Japanese yen (approximately $64) in Japan.
Ito projects that Switch 2 sales will reach 19 million units in the current fiscal year, surpassing Nintendo’s own forecast of 16.5 million units. He further elaborated, “We view Nintendo’s shares as undervalued. The market appears overly focused on near-term headwinds and conservative guidance, while underappreciating the long-term earnings growth from over 100 million Switch users migrating to the new platform and increasing game purchases.”
Software Sales Projections Raise Eyebrows
Another critical metric for market observers is Nintendo’s software, or game sales, as blockbuster titles are instrumental in driving hardware adoption. The Japanese gaming giant anticipates total software sales across both the original Switch and Switch 2 to reach 165 million units in the fiscal year ending March 2027, representing an approximate 11% year-on-year decrease.
“The year-on-year decline in game shipment guidance risks signaling that Nintendo lacks confidence in its pipeline,” noted Morningstar’s Ito. “However, as user engagement typically accelerates in the second year of a console cycle, we view this as too pessimistic.” Morningstar’s forecast for software sales stands at 205 million units, exceeding Nintendo’s internal projections.
The Switch 2 has seen some early game successes, including “Mario Kart World” and “Pokémon Pokopia,” the latter of which became a viral sensation, selling over 4 million units within its first five weeks of release in March.
Despite these successes, investors are keenly awaiting further details on Nintendo’s gaming pipeline, particularly regarding upcoming titles featuring its iconic franchises such as Mario and Zelda. The market is closely monitoring for an announcement of a “Nintendo Direct” event, the typical platform for unveiling major upcoming releases.
“We anticipate a new Nintendo Direct presentation outlining the software lineup for 2026 as early as next month,” Toto stated.
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