Nintendo’s net profit for July to September came in at 73.5 billion yen, about $465 million, down 29% from a year earlier and short of the 82.2 billion yen analysts expected. Switch 2 hardware is the reason. Nintendo shipped 2.67 million units in the quarter, down 41%, and 6.49 million in the first half, against about 10.4 million a year earlier.
Some of that is the launch comparison. A year ago the Switch 2 was brand new and every early adopter was buying. But the slowdown also follows a price increase this year that Nintendo tied to rising memory costs, as AI data centers soak up DRAM and NAND and component prices climb for everyone else. A console is a fixed-price product built on thin hardware margins, which makes it one of the first places a memory squeeze shows up.
Software is carrying the year
The half-year picture looks better than the quarter. Operating profit rose sharply for the first six months, helped by refunds of US tariffs Nintendo had paid, which were booked against cost of sales. Switch 2 software sales grew nearly 19%. Tomodachi Life: Living the Dream has shipped 8.81 million units, and Nintendo’s IP income, from films, licensing and merchandise, rose 88%. The Ocarina of Time remake landed with a 96 on Metacritic just as the results came out.
That’s the Nintendo model working as intended. Hardware gets players onto the platform, and first-party software and the brands make the money. Cumulative Switch 2 shipments now stand at about 26.35 million, a big enough base to keep software selling even while hardware cools.
The holiday test
Nintendo kept its full-year forecasts: 16.5 million Switch 2 units and 310 billion yen in net profit. Hitting the hardware number means shipping about 10 million consoles in the second half, around 5 million a quarter, nearly double the pace of the quarter just reported.
That’s a lot to ask with memory prices still rising and no sign the shortage eases before 2027. Nintendo can protect margins by holding the price, or protect volume by absorbing the cost, but probably not both. Watch the December quarter shipment number. If it comes in well under 5 million, the 16.5 million forecast goes, and the question for 2027 becomes whether Nintendo raises the price again.
For more on why memory is tight, see our sister site’s look at Micron’s paused Taiwan fab on taiwanstrait.com.