0746 GMT - Nintendo's near-term profitability could come under pressure from rising memory-chip prices, says Morningstar's Kazunori Ito in a note. The gross margin on the Switch 2 console missed Morningstar's expectations in the December quarter, likely due to more console shipments being from Japan, where margins are thinner. Nintendo is likely to keep console prices steady as it prioritizes growing its user base, even at the expense of profitability, he adds. Morningstar trims its FY 2026 and FY 2027 operating profit projections to 400 billion yen and 500 billion yen, respectively. Memory-chip prices may ease from 2028, which could then improve console margins, he adds. Morningstar lowers its fair-value estimate for Nintendo by 11% to Y12,500, reflecting weaker margin assumptions. Shares closed 11% lower at Y8,973. (megan.cheah@wsj.com)

(END) Dow Jones Newswires

February 04, 2026 02:46 ET (07:46 GMT)

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