Nintendo shares fell sharply after the company warned that Switch 2 sales will be weaker than investors expected and raised the console’s price in several markets. The stock closed 8.4% lower in Tokyo at 7,020 yen, its lowest level since August 2024, and has dropped 34% this year.
The market reaction reflects growing concern that higher hardware costs could slow demand for Nintendo’s newest console. The company said rising memory chip prices have pushed up production costs, forcing it to increase Switch 2 prices worldwide.
Price increases hit the launch momentum
Nintendo raised the Switch 2 price by $50 in the U.S. and by 10,000 Japanese yen in Japan. The company said the move was driven by a sharp increase in memory chip prices, which have climbed amid the AI infrastructure boom.
That decision came as a surprise to some investors because the Switch 2 is still less than a year old. Instead of forecasting growth in unit sales, Nintendo said it now expects 16.5 million Switch 2 units to be sold in the current fiscal year ending March 2027.
That forecast is below the 19.86 million units sold since the console’s launch last June. For investors, the smaller outlook raised questions about whether the higher price will weaken demand more than Nintendo expects.
Analysts say Nintendo may be cautious
Some market watchers argued that Nintendo is taking a conservative stance, which has long been part of its guidance style. Serkan Toto, CEO of Kantan Games, said Nintendo is likely “lowballing” its forecast and suggested buyers may adjust to the higher price over time.
Kazunori Ito, director at Morningstar, also called the company’s outlook “overly conservative.” He said the price increase looked unavoidable because memory costs had stayed elevated, while the shipment guidance seemed too cautious given the modest size of the hike.
Ito said he expects Switch 2 sales to reach 19 million units in the current fiscal year, above Nintendo’s own estimate. He also described Nintendo’s shares as undervalued, pointing to the company’s large base of more than 100 million Switch users who could move to the new platform and spend more on games.
Software sales also drew attention
Investors are also watching Nintendo’s game sales forecast, since strong software launches often support hardware demand. Nintendo said it expects combined software sales for the original Switch and Switch 2 to total 165 million units in the fiscal year ending March 2027.
That would be about 11% lower than the previous year, which some analysts see as another sign of caution. Ito said the weaker forecast could suggest Nintendo is not fully confident in its game pipeline, although he added that user engagement often improves in the second year of a console cycle.
Morningstar is projecting software sales of 205 million units, above Nintendo’s own estimate. Nintendo has already seen some early momentum on the Switch 2, including “Mario Kart World” and “Pokémon Pokopia,” which sold more than 4 million units in the five weeks after its release in March.
What investors are watching next
Attention is now turning to Nintendo’s next software announcements, especially upcoming titles tied to major franchises such as Mario and Zelda. Investors are also waiting for a new Nintendo Direct presentation, which usually serves as the company’s key event for revealing its game lineup.
Toto said such a presentation could arrive as soon as next month and would help clarify the software roadmap for 2026. For now, though, the market remains focused on a higher-priced Switch 2, a softer sales forecast, and the risk that Nintendo’s cautious outlook may not reassure shareholders in the near term.
