Key Takeaways
- Nintendo shares declined 8.4% in Tokyo trading, closing at 7,020 yen—the weakest level since August 2024
- The company raised Switch 2 pricing by as much as 20% across major markets, citing escalating memory chip expenses linked to AI sector demand
- Management projects 16.5 million Switch 2 consoles will be sold this fiscal year, below the 19.86 million sold at launch
- Nintendo’s operating profit projection of 370 billion yen significantly missed analyst consensus of 480 billion yen
- Industry experts suggest the company’s forecast may be deliberately cautious, with Morningstar predicting 19 million Switch 2 sales
Nintendo shares suffered a significant blow on Monday following the release of annual earnings results and forward guidance that disappointed the investment community.
The gaming giant’s shares tumbled 8.4% in Tokyo, settling at 7,020 yen—marking the lowest closing price since August 2024. Year-to-date, the stock has now retreated 34% in 2026.
For the fiscal period concluded on March 31, operating income climbed nearly 28% to reach 360 billion yen, supported by net sales that approximately doubled. Despite this growth, results fell short of market projections.
The company’s forward-looking statements for fiscal 2027 proved even more troubling. Nintendo projected operating income of 370 billion yen, substantially below the 480 billion yen consensus among financial analysts. Management anticipates annual revenue will contract 11.4% to 2.05 trillion yen.
Central to investor anxiety is the Switch 2 console. The company revealed expectations to ship 16.5 million units during the current fiscal year—notably lower than the 19.86 million units moved since the June 2025 launch.
Rising Console Prices Fuel Demand Concerns
Last Friday, Nintendo unveiled price adjustments for the Switch 2 across its primary markets including the United States, Japan, and Europe. American consumers face a $50 increase, while Japanese buyers will pay an additional 10,000 yen. These adjustments represent price elevations ranging from 7% to 20% depending on the region.
The driving force behind these increases: escalating memory chip costs fueled by massive AI infrastructure investments. Rising component expenses are compressing hardware margins and are anticipated to cool consumer purchasing appetite.
“The primary driver is clearly the pricing increase that Nintendo believes will result in reduced demand,” explained Serkan Toto, CEO of Kantan Games.
Software projections add to the uncertainty. Nintendo estimates combined Switch and Switch 2 software sales of 165 million units for fiscal 2027—representing approximately an 11% year-over-year decrease. This conservative software guidance has prompted questions regarding Nintendo’s confidence in its development pipeline.
Market observers are eagerly anticipating announcements regarding the next “Nintendo Direct” presentation, where upcoming releases—especially titles featuring beloved franchises like Mario and Zelda—are typically unveiled.
Industry Experts Question Conservative Projections
Despite the negative market reaction, not all analysts share the pessimistic outlook. Nintendo has an established pattern of providing cautious forecasts, and several industry watchers believe this tradition continues.
Kazunori Ito, director at Morningstar, characterized the guidance as “excessively conservative.” His analysis projects Switch 2 sales will achieve 19 million units this fiscal year, surpassing Nintendo’s official forecast. Ito also anticipates software sales reaching 205 million units, substantially exceeding the company’s 165 million projection.
“We consider Nintendo’s valuation attractive at current levels,” Ito stated, noting that markets are “failing to properly value the long-term revenue potential from transitioning over 100 million Switch users to the new hardware platform.”
Toto shared a similar perspective: “I’m convinced that Nintendo is, consistent with past behavior, deliberately understating expectations since consumers will acclimate to the higher console price point over time.”
On a more positive note, Nintendo highlighted a robust slate of third-party releases scheduled for the coming months. Initial Switch 2 releases including “Mario Kart World” and “Pokémon Pokopia” have demonstrated strong commercial performance—the latter achieving over 4 million units sold within its first five weeks of availability.
Toto suggested that a new Nintendo Direct event showcasing the 2026 software catalog could potentially be announced as early as next month.
