Nintendo Shares Tumble as Weak Forecast and Rising Switch 2 Costs Worry Investors

Nintendo shares plunged on Monday after the Japanese gaming giant posted annual earnings that missed analyst expectations and issued a weaker-than-expected outlook for the current fiscal year. The disappointing forecast raised concerns about slowing demand for the highly anticipated Switch 2 console and shrinking profit margins caused by rising component costs.

Nintendo Co. Ltd. shares dropped nearly 9% to 6,895 yen, making the company one of the worst performers on Japan’s Nikkei 225 index, despite the broader market gaining 0.8%.

For the fiscal year ending March 31, Nintendo reported operating profit of 360 billion yen ($2.29 billion), representing a 28% increase from the previous year. The company also recorded a sharp rise in net sales, boosted by strong demand for the Switch 2 during its launch period. However, the profit result still came in below market expectations, disappointing investors.

Looking ahead, Nintendo forecast operating profit of 370 billion yen for the current fiscal year, significantly lower than analysts’ estimates of around 480 billion yen. The company also expects annual sales to decline 11.4% year-over-year to 2.05 trillion yen.

A major concern for Nintendo is the increasing cost of hardware production. The company said it plans to raise Switch 2 prices by 7% to 20% across the United States, Europe, and Japan later this year due to higher prices for memory chips and other key components. The global shortage of memory chips, driven largely by strong demand from the artificial intelligence industry, continues to pressure electronics manufacturers worldwide.

Nintendo now expects Switch 2 sales to reach 16.5 million units in fiscal 2027, down from nearly 19.9 million units previously. Analysts believe higher console prices could weaken consumer demand and slow the momentum generated by the console’s blockbuster launch.

While Nintendo expects software and video game sales to improve, profit margins for the Switch 2 are projected to shrink because of elevated production costs. Investors were also underwhelmed by Nintendo’s upcoming first-party game lineup for 2026, although the company highlighted several new third-party releases expected in the coming months.

The original Switch console is also nearing the end of its lifecycle, with Nintendo forecasting weaker sales as consumers shift toward newer hardware.