Nintendo Co. Switch 2 game consoles at a Bic Camera Inc. electronics store in Tokyo, Japan, on Thursday, June 5, 2025. Nintendo Co. fans from Tokyo to Manhattan stood in line for hours to be among the first to get a Switch 2, fueling one of the biggest global gadget debuts since the iPhone launches of yesteryear.
Nintendo shares plunged more than 10% on Wednesday, a day after the gaming giant missed market estimates for quarterly revenue and as it faces headwinds from an unprecedented memory shortage.
The company beat profit estimates though, clocking a 24% jump year on year, bolstered by sales of its Nintendo Switch — now the company's best selling console ever following its release in 2017. Revenue rose 86%.
Nintendo is facing pressure this year from a shortage in memory chips — a key component in its gaming consoles — that has resulted in surging prices.
According to Andrew Jackson, head of Japanese Equity Strategy at Ortus Advisors, investors remain concerned about the impact that memory costs will have on the company's margins.
While Nintendo President Shuntaro Furukawa said Tuesday that memory price rises were not significantly impacting results for the financial year, he said it could impact profitability if the component costs remain high over the longer term.
Nintendo primarily uses dynamic random access memory, or DRAM, in its consoles. This type of memory is suffering from shortages due to growing AI and data center demands.
Contract prices for conventional DRAM chips in the first quarter of the year are projected to rise 90% to 95% compared to the previous three months, according to a report from market researcher TrendForce on Monday.
Last month, a top semiconductor industry CEO told CNBC that the memory chip shortage was expected to persist through 2027.
Despite the memory crunch, Nintendo on Tuesday maintained its full-year Switch 2 sales forecast. Though whether its pipeline of upcoming Switch 2 games will be enough to convince consumers to upgrade to the latest gaming console, released in June last year, remains to be seen.
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