Nintendo shares sink 10% as gaming giant faces memory shortage concerns
Nintendo’s Switch 2 Faces Headwinds: Memory Shortage and Market Expectations
Nintendo shares experienced a significant drop of over 10% today, February 4, 2026, following the release of its quarterly earnings report. While profit estimates were surpassed with a 24% year-on-year increase, driven by strong sales of the Nintendo Switch – now the company’s best-selling console ever – revenue fell short of market expectations. The decline is largely attributed to growing concerns surrounding a global memory chip shortage.
The Memory Crunch: A Deep Dive
The current shortage of dynamic random access memory (DRAM), a key component in Nintendo’s gaming consoles, is driving up prices. Contract prices for conventional DRAM chips are projected to rise 90% to 95% in the first quarter of this year compared to the previous three months, according to a report from TrendForce. Industry experts anticipate this shortage will persist through 2027.
According to Andrew Jackson, head of Japanese Equity Strategy at Ortus Advisors, investors are particularly worried about the impact of rising memory costs on Nintendo’s profit margins. Nintendo President Shuntaro Furukawa acknowledged the price increases but stated they haven’t significantly impacted results for the current financial year, though they could pose a challenge if sustained long-term.
The demand for DRAM is being fueled by the rapid growth of artificial intelligence (AI) and data centers, creating competition for resources traditionally allocated to gaming consoles.
Switch 2 Sales and Future Outlook
Despite the memory chip challenges, Nintendo has maintained its full-year sales forecast for the Switch 2, which launched in June 2025. However, analysts are questioning whether the upcoming game pipeline will be sufficient to drive continued consumer upgrades.
Nintendo plans to release “Mario Tennis Fever” in February and “Pokémon Pokopia” in March, leveraging its two most popular franchises. The release of “The Super Mario Galaxy Movie” in April is also expected to potentially boost console sales, mirroring the positive impact the 2023 Super Mario movie had on previous console sales.
James McWhirter, senior analyst at Omdia, believes 2026 will be a critical year for the Switch 2, as Nintendo aims to broaden its appeal beyond its core gaming audience.
Financial Performance and Market Rally
The success of the Switch 2 has powered a $39 billion rally for Nintendo this year. Revenue rose 86% overall. However, Nintendo’s shares have still lost more than 15% of their value so far in 2026.
Frequently Asked Questions
Q: What is causing the memory chip shortage?
A: Growing demand from the AI and data center industries is increasing competition for DRAM, a key component in gaming consoles.
Q: How is the memory shortage affecting Nintendo?
A: Rising DRAM prices are putting pressure on Nintendo’s profit margins, and investors are concerned about the long-term impact.
Q: What games are planned for the Switch 2 in the near future?
A: Nintendo plans to release “Mario Tennis Fever” in February and “Pokémon Pokopia” in March.
Q: Has the Switch 2 been a success so far?
A: Yes, the Switch 2 has driven a $39 billion rally for Nintendo and contributed to a 24% increase in year-on-year profits.
Pro Tip: Keep an eye on industry reports from companies like TrendForce for the latest updates on memory chip pricing and availability.
Did you know? The Nintendo Switch is now the company’s best-selling console ever, following its release in 2017.
Stay informed about Nintendo’s performance and the evolving gaming landscape. Visit Nintendo Support for more information on the Switch 2 and other Nintendo products.