Key Highlights:

• Switch 2 sales were strong, but lack of major game launches worries investors
• Profit forecast missed Street estimates, adding pressure on the stock
• Rising memory chip prices raise concerns over future console margins

Nintendo shares fell 11% on Wednesday, marking one of the stock’s sharpest single-day declines in months. The fall came as investors questioned whether the Switch 2 can sustain early momentum amid a thin software pipeline and rising cost pressures. The decline matters because Nintendo has been one of the strongest-performing gaming stocks over the past year.

The stock closed its previous session at ¥8,620 and slid to around ¥7,670 during Wednesday’s trading.

Strong sales, but not strong enough?

Nintendo reported robust Switch 2 sales during the year-end shopping season. However, the company kept its annual net profit forecast unchanged at ¥350 billion, below the ¥406 billion average estimate from analysts tracked by LSEG.

That gap triggered fresh caution on the Street. Investors had priced in stronger follow-through after early demand surprised on the upside.

According to Jefferies, results showed record-breaking hardware sales but lacked the depth needed to excite markets long term.

Why Switch 2 momentum is under scrutiny

The Switch 2, launched in June, is seen as critical to Nintendo’s next growth cycle. Early momentum matters because it helps build a large user base that attracts third-party developers and drives software sales.

However, analysts flagged a slowdown in game purchases compared with the original Switch’s early years. That difference is now shaping investor sentiment.

Nintendo successfully extended the original Switch’s life with blockbuster titles from The Legend of Zelda franchise. The absence of similar high-impact releases for Switch 2 has raised concerns.

Competition is heating up fast

The gaming landscape is also getting more crowded. Platforms like Roblox and upcoming titles such as Grand Theft Auto VI from Take-Two Interactive are competing aggressively for gamer attention later this year.

This broader competition adds pressure on Nintendo to accelerate content delivery.

Margin worries add another layer of risk

Beyond demand, cost concerns are growing. Rising memory chip prices are expected to weigh on profitability in future fiscal years.

Nintendo said current earnings remain largely unaffected. However, analysts warn that prolonged cost inflation could hurt console margins from the next fiscal year onward.

Morningstar noted that console profitability may decline further if memory prices stay elevated.

The road ahead for Nintendo shares

Nintendo shares had surged to record highs last year on optimism around the Switch successor. Since November, that optimism has steadily cooled. As Switch 2 momentum comes under sharper scrutiny, investors will closely watch upcoming game launches and cost trends.

The next few quarters could define whether Nintendo can restore confidence or remain under pressure.