Nintendo Shares Fall Nearly 6% as Surging Global Memory Chip Prices Threaten Switch 2 Profit Margins

Shares of Nintendo fell 5.72% on Friday, dropping 466 yen to close at 7,679 yen in Tokyo trading, even as the broader Nikkei 225 index surged more than 4% during the same session, underscoring how directly the ongoing global memory chip shortage continues to weigh on the video game maker's stock even amid a broader market rally.

Friday's decline stood out against the backdrop of a powerful rebound across Asian technology stocks, driven by blowout earnings from Microsoft, Amazon and Meta Platforms that sent chipmakers surging worldwide. But that same rally in memory chip prices, driven by tight global supply and surging demand tied to artificial intelligence infrastructure, has become an increasingly acute problem for Nintendo specifically, since the company relies heavily on memory components to manufacture its Switch 2 console.

Nintendo has repeatedly flagged rising memory chip costs as a direct threat to its profitability throughout 2026. When the company reported earnings in February, its stock slid as much as 11% in Tokyo trading after Nintendo missed market estimates for quarterly revenue and flagged mounting headwinds from what it described as an unprecedented shortage of memory chips, even as profit growth for the nine-month period remained strong. The company's shares fell again in May, dropping between 7% and 8.4% after Nintendo confirmed it would raise the retail price of the Switch 2 in European, U.S. and Japanese markets by 7% to 20% later in the year specifically because of higher component costs, with memory chips cited as the primary driver.

The company's most recent full-year results, reported in May, showed operating profit for the fiscal year ending March 31 climbing nearly 28% to 360 billion yen, or roughly $2.29 billion, aided by a near-doubling of net sales. Despite that strong headline growth, the profit figure still fell short of market expectations. Nintendo's forecast for the current fiscal year proved considerably more cautious, with the company projecting operating profit of just 370 billion yen, well below market forecasts of 480 billion yen, and forecasting a sales decline of 11.4% year-on-year to 2.05 trillion yen. Nintendo specifically guided for weaker Switch 2 sales in the current fiscal year, citing the planned price increases tied to component cost pressure, with the company forecasting fiscal 2027 Switch 2 unit sales of 16.5 million, down from 19.86 million units sold in the prior year.

Not every analyst has viewed Nintendo's recent stock weakness as fully justified by the underlying fundamentals of the business. Speaking following the company's May guidance, Morningstar analyst Ito described Nintendo's shares as undervalued relative to the company's longer-term prospects. "We view Nintendo's shares as undervalued," Ito said. "The market appears overly focused on near-term headwinds and conservative guidance, while underappreciating the long-term earnings growth from over 100 million Switch users migrating to the new platform and increasing game purchases."

Nintendo's stock has continued to face pressure from sources beyond memory chip costs alone throughout the year. Shares fell more than 7% in June after the company's latest Nintendo Direct presentation disappointed investors by failing to unveil a new mainline entry in the Super Mario franchise, with the showcase instead centered on a remake of "The Legend of Zelda: Ocarina of Time" and other previously established titles. Reports had separately indicated that the next major Mario title would not arrive until 2027 rather than during Nintendo's ongoing 40th anniversary celebrations for the franchise this year.

Nintendo's next detailed quarterly earnings release is scheduled for August 6, according to the company's investor relations disclosures, giving the market its next formal opportunity to assess how the combination of rising memory chip costs, planned price increases and the broader software release pipeline are affecting the company's financial trajectory heading into the back half of the fiscal year.

The stock's 52-week trading range spans from a low of 6,544 yen to a high of 14,795 yen, according to recent trading data, illustrating the scale of the decline Nintendo shares have experienced over the past year even as the underlying Switch 2 console has continued to post strong unit sales figures relative to Nintendo's own historical hardware launches. Nintendo's current price-to-earnings ratio stands at approximately 21.07, with the stock currently offering a dividend yield of roughly 2.85%.

Friday's decline adds to what has already been a volatile year for Nintendo's stock, with shares having fallen nearly 45% over the trailing 12-month period at various points during 2026, according to recent market analysis, even as the company's Switch 2 console continued setting new sales records relative to prior Nintendo hardware generations. With global memory chip prices continuing to climb amid what rival Samsung Electronics has separately warned could be a supply shortage persisting through 2028, investors are likely to keep close watch on how Nintendo's profit margins hold up in the coming quarters, particularly given the company's heavy reliance on memory components across its flagship gaming hardware.