Nintendo's falling shares due to weak sales forecasts for Switch 2

Nintendo recently saw a significant drop in its share price, falling by nearly 8% on 11 May 2026. The decline followed a pessimistic outlook from the company on expected Switch 2 sales in its second year. This marks Nintendo's stock hitting its lowest point in nearly two years.

Sales forecasts and market pressure

In a recent quarterly report, Nintendo announced an expected decline in console sales in the second year. This is notable because consoles typically gain momentum in their second year on the market. However, Nintendo’s cautious stance has created uncertainty among investors, especially given the strong Switch 2 sales figures in its first year.

The Switch 2 has already exceeded its first-year forecast of 15 million units by nearly 5 million. Despite these numbers, the company is unsure whether it can maintain that sales trend, particularly with upcoming price increases and continued pressure from memory component shortages.

Competition from Sony

While Nintendo is dealing with falling shares, Sony saw its share price rise by 10% following its latest quarterly results. Sony’s financial figures showed a decline in hardware sales, but an increase in profit. Strong digital sales are supporting Sony’s gaming segments, even amid the challenges of memory shortages.

Analyst feedback

Analysts have offered mixed reactions to Nintendo’s forecasts. Kazunori Ito of Morningstar pointed to the possible implications of a yearly decline in game sales. He questions why Nintendo would forecast a drop when there is usually room for growth in the second year. This has raised questions about the company’s future game pipeline and whether major titles are on the way to strengthen the Switch 2.

The future of the Nintendo Switch 2 looks uncertain. While early sales figures have exceeded expectations, challenges such as memory shortages and a weakening sales forecast continue to worry investors. The gaming industry is watching closely to see how Nintendo positions itself to face competition, especially from Sony.