Nintendo Shares Jump 5% as Profit Surges on Strong Switch 2 Software Sales Despite Weak Hardware

TOKYO — Nintendo shares surged Friday, closing 4.8% higher at 8,011 yen after climbing as high as 8,043 yen earlier in the session, following a first-quarter earnings report that showed profit soaring even as hardware sales for the company's flagship Switch 2 console declined from the same period a year earlier.

The gain comfortably outpaced the broader Tokyo market, with the benchmark Nikkei 225 index falling 0.8% on the same day, underscoring how strongly investors reacted to Nintendo's results, which were released after markets closed Thursday.

Profit Beats Expectations

Nintendo reported net profit attributable to the company of 145.4 billion yen for the quarter ended June 30, up sharply from 80.9 billion yen in the same period a year earlier and comfortably ahead of the 119.8 billion yen analysts had expected, according to consensus estimates compiled by S&P Global Visible Alpha. Operating profit for the quarter climbed to 142.5 billion yen, an increase of roughly 150% from the prior-year period, while ordinary profit rose 115.1% to 206.1 billion yen.

The scale of the profit surge stood in contrast to Nintendo's hardware performance during the quarter, illustrating how strongly software sales and other revenue streams contributed to the company's bottom line even as console shipments themselves slowed.

Switch 2 Hardware Sales Slow From a Year Ago

Nintendo sold 3.82 million Switch 2 units during the April-to-June quarter, down 34.4% from the same period a year earlier, when the console had just launched in June 2025 and was riding an initial wave of pent-up consumer demand. Sales of the original Switch hardware, now well into its later life cycle, fell even further, dropping 31.8% to just 0.66 million units for the quarter.

Since its launch, the Switch 2 has now sold a cumulative 23.68 million hardware units worldwide, with cumulative software sales for the platform reaching 58.17 million units. The original Switch, meanwhile, has now sold a cumulative 156.59 million hardware units and 1.56 billion software units over its lifetime, figures that continue to underscore the console's status as one of the best-selling gaming platforms in industry history.

Software Drives the Results

Rather than hardware, it was software sales that helped carry Nintendo's quarterly results. "Tomodachi Life: Living the Dream" led the way, moving 7.94 million units during the quarter, while "Pokémon Pokopia" added a further 1.27 million units sold. Nintendo also pointed to strength in its mobile and intellectual property licensing business, which the company said generated 16.7 billion yen in income during the quarter, up 107.4% from a year earlier.

Nintendo has continued expanding its Switch 2 software lineup to sustain the platform's momentum. The game "Splatoon Raiders" was added to the library in July, with additional major titles scheduled for release later this year, including "Fire Emblem: Fortune's Weave" in September, "Nintendo Switch Sports Resort" in October, and a remake of "The Legend of Zelda: Ocarina of Time" also planned for release before the end of 2026. For the original Switch platform, the new title "Rhythm Heaven Groove" was also released during the period.

In a statement accompanying the results, Nintendo said it aims to maintain momentum for the Switch 2 by continuing to widen its installed hardware base while working to expand sales of existing software titles alongside a steady cadence of new releases, adding that other third-party software publishers also plan to bring a range of additional titles to the platform in the months ahead.

A Cautious Full-Year Outlook

Despite the strong quarterly beat, Nintendo maintained a relatively conservative full-year outlook for fiscal 2026. The company reaffirmed guidance calling for earnings of 43 cents per share and total sales of approximately $13.071 billion for the fiscal year, according to data from Benzinga Pro. That earnings guidance sits below the analyst consensus estimate of 51 cents per share, while Nintendo's revenue forecast similarly trails the broader analyst consensus estimate of $14.810 billion, suggesting the company itself remains cautious about the pace of growth for the remainder of the fiscal year even after a standout opening quarter.

Nintendo has separately flagged rising costs tied to memory chip components used in its hardware, warning that inflation in artificial intelligence-driven memory prices could add close to $700 million in additional costs, a factor the company appears to be weighing carefully as it calibrates its full-year guidance despite the strong first-quarter results.

Emphasizing Regular Releases as Key to Growth

Nintendo has continued to stress that a steady stream of new game releases remains essential to expanding the Switch 2's installed user base over time, rather than relying primarily on hardware sales momentum alone. That strategy mirrors the approach Nintendo took with the original Switch console, which sustained strong sales for years after its 2017 launch through a consistent cadence of first-party titles alongside continued third-party software support.

A Strong Quarter Relative to Rivals

Nintendo's results this week arrived within roughly two weeks of comparable quarterly reports from rival console makers Sony and Microsoft, both of which also reported sales declines for their respective hardware platforms during the same April-to-June period. Sony's PlayStation-focused Game & Network Services segment reported operating income of 202.0 billion yen, up 37% year over year, even as PS5 hardware sales fell to roughly 1.5 million to 1.6 million units, down about a third from the prior year, with the company's growth instead driven by its PlayStation Network services business, which reported a record 125 million monthly active users during the quarter.

With a slate of major first-party titles set to arrive over the coming months, including the highly anticipated Zelda remake, Nintendo's ability to sustain Friday's rally will likely hinge on whether those upcoming releases can reaccelerate hardware demand following the notable year-over-year decline reported this quarter. Investors are also likely to continue watching closely for any further updates on memory chip cost pressures, given the company's own warning about the potential financial impact heading into the remainder of the fiscal year.