Nintendo Stock Plummets Amid Memory Chip Shortage and Revenue Miss

Nintendo’s share price fell by more than 10% on Wednesday after the company reported quarterly revenue below market expectations and confronted challenges from an unprecedented shortage of memory chips. The firm exceeded profit forecasts, recording a 24% year‑on‑year increase in profit supported by continued strong sales of the Nintendo Switch, which remains the company’s best‑selling console since its 2017 debut, while revenue rose 86%.

The company is contending with rising memory costs this year, driven by a shortage of a key component used in its consoles that has pushed prices higher. Andrew Jackson, head of Japanese Equity Strategy at Ortus Advisors, noted in a research note that investors are concerned about the potential margin impact from elevated memory expenses. Nintendo President Shuntaro Furukawa stated on Tuesday that recent memory price increases have not materially affected results for the financial year, but cautioned that sustained high component costs could weigh on profitability over the longer term.

Nintendo primarily relies on dynamic random access memory (DRAM) for its consoles, and shortages in this segment have been exacerbated by growing demand from AI and data centers. Market researcher TrendForce reported on Monday that contract prices for conventional DRAM chips are expected to rise 90% to 95% in the first quarter compared with the prior three months. A leading semiconductor industry CEO told CNBC last month that the memory shortage is likely to persist through 2027.

Serkan Toto, CEO of game consultancy Kantan Games, said in an email to CNBC that continued trends in the memory market could prompt Nintendo to raise prices. He added that such increases would be difficult for Nintendo’s largely casual customer base to accept, noting that the Switch 2—released in June last year and now accounting for the majority of console sales—is already positioned at a relatively high price point.

Beyond the component shortage, analysts have expressed concern about the Switch 2’s market momentum, even as Nintendo maintained its full‑year sales forecast for the console on Tuesday. Toto observed that the first year after a console launch is critical and that replicating the exceptional first‑year performance of the original Switch presents a significant challenge. Nintendo’s ability to match past success will depend in large part on the reception of upcoming Switch 2 titles and whether they persuade consumers to upgrade.

Nintendo plans to release “Mario Tennis Fever” for the Switch 2 in February and “Pokémon Pokopia” in March, both drawn from its most popular franchises. The company also has “The Super Mario Galaxy Movie” scheduled for April; the first Super Mario film in 2023 materially boosted console sales, and Nintendo may be seeking a similar uplift for the Switch 2. James McWhirter, senior analyst at Omdia, told CNBC that 2026 will be a “make‑or‑break” year for the Switch 2 as Nintendo aims to broaden its mass‑market appeal. Nintendo’s shares have declined by more than 15% year to date.