Nintendo's Earnings Beat Came With One Big Catch: Memory Costs Are Rising Fast

• Nintendo’s Q1 revenue declined 9.5% to 517.8 billion Japanese yen ($3.28 billion), but came in sharply higher than expectations.
• Switch 2 sales have softened as launch momentum faded amid supply constraints and a thin game release slate.
• The U.S. stock NTDOY does not trade outside of the regular market hours.

Japanese games maker Nintendo beat Wall Street’s expectations for its fiscal first-quarter revenue and net profit, and maintained its forecast for the year ending in March 2027.

According to results issued early Thursday morning, revenue declined 9.5% to 517.8 billion Japanese yen ($3.28 billion), beating expectations of 444.96 billion yen from LSEG/Reuters.

Net profit increased 53% to 147.4 billion yen versus 78.30 billion yen expected. Nintendo said it had factored nearly a 100 billion yen impact from higher component prices, particularly for memory, and tariffs into its cost of sales. 

Nintendo shares ended nearly 3% higher in Tokyo on Thursday, just ahead of the earnings report. The U.S. stock NTDOY does not trade outside of the regular market hours.

Tariff Refunds Boost Operating Profit

“Although sales decreased compared to the same period of last fiscal year, operating profit increased 150.5% year-on-year to 142.5 billion yen, due to the growth in sales of software, which accounted for a larger proportion of total sales, and the refund of IEEPA tariffs in the US, which were recorded as cost of sales in prior periods,” the company said in its earnings statement.

Nintendo’s flagship Switch 2 gaming console, launched last June, uses memory chips whose prices have risen sharply over the past year. The company raised Switch 2 prices in Japan in May, with hikes in the prices of handhelds sold in the U.S. taking effect in September.

Nintendo Switch 2 hardware sales fell 34.4% from a year earlier to 3.82 million units, while sales of the original Nintendo Switch dropped 31.8% to 0.66 million units.

Switch 2 sales have softened as Nintendo faces tougher year-over-year comparisons following the console’s blockbuster launch, while supply constraints and the lack of major new game releases have tempered demand.

Retail View On Nintendo

NTDOY was among the top five trending stocks on Stocktwits early Thursday, with retail sentiment of the ticker shifting to ‘bullish’ from ‘neutral.’

“$NTDOY Nice! Americans pay the tariff tax and then they pay taxpayer money as a fine for tariff tax. Play stupid games, win stupid prices,” a trader wrote.

The U.S. shares of Nintendo are down 29% year to date.

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