Nintendo Shares Fall After Weak Earnings Outlook
Nintendo shares dropped sharply on Monday after the Japanese gaming company reported annual earnings that missed market expectations and issued weaker-than-expected guidance for the current fiscal year.
Nintendo stock fell as much as 9% to 6,895 yen, making it one of the weakest performers on Japan’s Nikkei 225 index, despite the broader market rising 0.8%.
Annual Profit Rises but Misses Expectations
Nintendo reported operating profit of 360 billion yen, or approximately $2.29 billion, for the fiscal year ending March 31.
The figure represented an increase of nearly 28% year-over-year, supported by a near doubling in net sales.
However, despite the strong growth, the company’s profit results still came in below analyst expectations, disappointing investors.
Nintendo Forecasts Lower Profit for Current Fiscal Year
The company forecast operating profit of 370 billion yen for the current fiscal year, significantly below market estimates of around 480 billion yen.
Nintendo also expects total sales to decline 11.4% year-over-year to 2.05 trillion yen.
The weaker guidance raised concerns that demand for Nintendo’s hardware could slow following the strong initial launch of the Switch 2 console.
Higher Component Costs Hurt Switch 2 Outlook
Nintendo said sales of the Switch 2 are expected to soften due to rising production costs linked to shortages of memory chips and other critical components.
The company announced plans to increase retail prices for the Switch 2 later this year across key markets including the United States, Europe, and Japan.
Price increases are expected to range between 7% and 20%, depending on the region.
According to Nintendo, higher memory chip costs remain one of the biggest challenges facing console production.
Switch 2 Sales Expected to Slow
Nintendo now expects Switch 2 sales to reach 16.5 million units during fiscal 2027, lower than the 19.86 million units sold during the previous year.
While the Switch 2 became one of the fastest-selling consoles ever following its launch last year, the company believes higher prices could reduce consumer demand going forward.
The shortage of memory chips has largely been driven by strong demand from the artificial intelligence industry, which continues to consume large amounts of advanced semiconductor supply.
Gaming Software Sales Expected to Improve
Despite concerns over hardware sales, Nintendo said software sales are expected to improve as more video game titles are released.
However, profit margins on the Switch 2 are expected to weaken due to rising component expenses.
Nintendo also acknowledged that sales of the original Switch console are expected to continue slowing during the current fiscal year as the company shifts focus toward newer hardware.
Investors Disappointed by Upcoming Game Lineup
The company’s planned lineup of first-party game releases for 2026 received a relatively muted response from investors.
However, Nintendo highlighted that several major third-party game releases are expected to arrive in the coming months, which could help support overall software demand.
Markets will now closely monitor whether Nintendo can maintain momentum for the Switch 2 while managing rising hardware production costs and increased competition within the gaming industry.
