Something's rotten in Mushroom Kingdom, and this time around it's not Bowser's fault. Nintendo's stock price took a 4.7% nosedive today, due to predictions that the Japanese console maker won't be able to keep its profit margins as high as expected. As has become the norm these days, the fear is caused by the ongoing RAM and chip availability crisis, as AI datacenters grab any transistor that's not nailed to the floor.
The latest dip wiped $14 billion off Nintendo's market cap and brought the stock roughly to its May price, eroding gains made since then. It's also the second hit in as many days, with the weekly drop being about 9.8%. The production cost for the Switch 2 has risen substantially, given that it uses 12 GB RAM chips whose cost has reportedly risen by 41% in Q4 alone.
Adding insult to injury, the NAND flash onboard the console also saw an 8% aggravation. Bloomberg notes that this rise in storage pricing will also reflect itself on storage cards, further cementing statements previously made by OEMs like Transcend and Adata, some of which are even unable to secure flash chips to begin with. The Reuters report also points out that microSD cards aren't really optional, as some titles chew up most of the Switch 2's capacity.
Stockholders are right to be concerned, as reports from earlier in the year remark that Nintendo was apparently selling the Switch 2 at a very slim profit margin, with some outfits estimating that non-Japanese sales could be at a simple break-even point, or even at a loss. The U.S. tariff situation is only likely to complicate that matter further.
Having said all that, the Switch 2 actually sold at an aggressive price during Black Friday, effectively bundling Mario Kart World for free with the console, so it's not impossible that Nintendo saw where the RAM winds were heading and took the appropriate precautions beforehand.
Plus, even with this latest dip, the stock is still up around 25% for the year. Add to that the fact that Nintendo almost certainly makes the lion's share of its money from games rather than hardware, and maybe this situation is just a temporary concern.
Bruno Ferreira is a contributing writer for Tom's Hardware. He has decades of experience with PC hardware and assorted sundries, alongside a career as a developer. He's obsessed with detail and has a tendency to ramble on the topics he loves. When not doing that, he's usually playing games, or at live music shows and festivals.
Oh no! The Switch 2 is going to go from costing double what its worth to costing DOUBLE what it's worth (but with Nintendo having slightly smaller profit margins).
Whatever will we do, just not use this gameless kids toy console we already regret buying? I'm one step ahead of you there, buddy.
Oh no! The Switch 2 is going to go from costing double what its worth to costing DOUBLE what it's worth (but with Nintendo having slightly smaller profit margins).
Whatever will we do, just not use this gameless kids toy console we already regret buying? I'm one step ahead of you there, buddy.
Too bad that the moderation is pretty strict here otherwise it would be so much fun to let you know what I think about your comment in a very harsh language. And it will be even more a pleasure to use my Switch 2 now that I know the console is making you so mad.
And it's always astonishing to see people like you enjoying news like this because it's about a company they hate, without realizing that everyone will be affected by this crisis.
By the way, a handled console that has the power of a PS4 sold for less than 500$ is a pretty good deal, no matter what haters like you think.
Nintendo is the only Game console maker that still has a good games library like old times ... not like other consoles flooded with trash games nowadays ...
