Nintendo investors had a rough Wednesday. The company’s stock price tumbled more than 10% in a single day after the gaming giant released its latest financial report. While the numbers showed that the company is still making a lot of money, investors are spooked by a massive shortage of memory chips that could make it much more expensive for Nintendo to build its consoles.
On the surface, the company’s recent performance looks strong. Profits jumped 24% compared to the same time last year, and total revenue surged by 86%. Most of this success comes from the original Nintendo Switch, which hit shelves in 2017 and has since become the company’s most popular console ever. However, even with those big numbers, the company still missed the high revenue targets that analysts expected.
The real worry involves the parts inside the machines. There is currently a global shortage of DRAM, the specific type of memory chip that Nintendo uses. Because tech giants are buying up all the available chips to build AI systems and data centers, prices are skyrocketing. Some reports suggest that the cost of these chips could rise by as much as 95% in just a few months. Nintendo President Shuntaro Furukawa mentioned that while these costs haven’t ruined their budget yet, they will definitely hurt profits if the shortage lasts for years.
This crisis is happening at a critical time. Nintendo launched the Switch 2 last June, and they need it to be a massive hit with the general public. To keep the momentum going, the company is leaning on its biggest characters. They plan to release Mario Tennis Fever in February and Pokémon Pokopia in March. They are also betting on the big screen with The Super Mario Galaxy Movie coming out in April. They hope the film will drive console sales, just like the first Mario movie did in 2023.
Analysts say 2026 will be a “make-or-break” year for the Switch 2. With the stock already down 15% this year, Nintendo has to prove it can handle rising manufacturing costs while still giving fans a reason to upgrade to the new hardware.
