By Jason Chau

Shares of Nintendo surged after a report showed that U.S. sales of its Switch 2 beat rival game consoles last year, allaying concerns about slowing sales.

The stock jumped as much as 7.0% in Tokyo trading Friday before paring gains to close 4.5% higher at 10,400 yen, its largest closing gain in almost three months.

The rally came after U.S. market research firm Circana said Switch 2 was the best-selling game console in the U.S. by both volume and value in December and in 2025, beating its main competitor, Sony Group's PlayStation 5.

The latest U.S. sales figures for Switch 2 suggest that shipments haven't slowed significantly, contrary to reports of slowing sales during the holiday season, Morningstar equity research director Kazunori Ito said.

Friday's gains provided much-needed positive news for the company.

Nintendo's shares have declined by almost 30% since August as costs swell amid a surge in memory-chip prices driven by artificial-intelligence demand.

Rising costs have sparked investor concerns about the retail price of the already costly Switch 2. It sells for $450 in the U.S. and has a starting price of 49,980 yen in Japan, equivalent to about $315.

Atul Goyal, managing director at Jefferies, said the stock has been largely mispriced on a false narrative that sales are faltering. The impact of rising memory prices is small and manageable, cushioned by large software sales, large inventories and long-term contracts, he said.

"We believe sustained profit growth will drive stock price higher to our [target price of Y21,000]," he added.

Investors will look to Nintendo's earnings due early next month for official console shipment figures to gauge the impact of memory costs on the company, Morningstar's Ito said.

The videogame maker behind the "Super Mario" and "Pokémon" franchises has said it expects to sell 19 million units of the Switch 2 by March, up from the previous forecast of 15 million.

Write to Jason Chau at jason.chau@wsj.com

(END) Dow Jones Newswires

January 23, 2026 05:52 ET (10:52 GMT)

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