MW Nintendo's stock has been a big winner, but have Switch 2 expectations gotten too high?

By James Rogers

Wedbush adopts a more cautious stance on Nintendo's stock, saying Switch 2 forecasts may be out of whack and competition is heated

Nintendo's long-awaited Switch 2 videogame console was launched earlier this year.

Nintendo has enjoyed strong demand for its eagerly anticipated Switch 2, which launched earlier this year, but expectations around the videogame console's longer-term impact may be too high.

There was so much excitement around the Switch 2's launch that Nintendo (NTDOY) (JP:7974) initially struggled to meet demand in Japan. In the U.S., online preorders at GameStop Corp. $(GME)$ ran into technical issues, with the retailer citing "overwhelming demand." Buoyed by the console's success, Nintendo's Japan-listed shares have climbed 46% this year, while the American depositary receipts have risen 57%.

Wedbush analyst Alicia Reese warned that consensus expectations for Switch 2 may have gotten overheated. She said that over a cumulative three-year basis, expectations for unit sales are outpacing what was seen for both the first-generation Switch (launched in 2017) and Wii (launched in 2006) - two popular items.

On a three-year basis, the consensus view is that the Switch 2 will outpace its predecessor by 10 million units over the console's first three years and outpace Wii units by 6 million, according to Reese. But she is skeptical about whether Nintendo will be able to achieve these numbers.

"While both Switch 1 and Wii experienced supply constraints in their respective first years, we are less sanguine that Switch 2 will outpace the demand of two of the best-selling consoles of all time," she wrote. "In fact, we think the argument that Nintendo will slightly underperform or perform in line with those two consoles is much more convincing."

Reese cited the higher sticker price of Switch 2, which costs 50% more than Switch 1, as well as fewer blockbuster launch titles for the newer console. Switch 2, she added, faces a more competitive environment than its predecessor, due to the rapid growth of companies such as Roblox Corp. $(RBLX)$.

The analyst downgraded shares of Nintendo to neutral from outperform, noting that the stock had reached Wedbush's price target of 14,000 Yen. This, she said, fully prices in the best-case scenario of hardware and software unit sales over the next several quarters.

Despite tariff uncertainty, Nintendo's Switch 2 price tag has remained unchanged at $449.99, although the price of a number of accessories rose earlier this year amid what the company described as "changes in market conditions."

Wedbush's Reese said that more tariff-related price hikes could come, pointing in particular to Vietnam. "With Vietnamese goods facing a 20% tariff, we expect Nintendo to raise prices across its accessories and some games to pass through tariff-related costs to U.S. consumers," she wrote.

Nicole Lyn Pesce contributed.

-James Rogers

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

September 17, 2025 10:36 ET (14:36 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.