Nintendo(US:NTDOY) 智通财经网·2026-02-04 07:20Core Viewpoint - Nintendo's stock price has experienced its largest drop in 18 months due to disappointing earnings data, highlighting significant pressure on operating profit margins and concerns over rising storage chip prices affecting profitability through 2026 [1][2]. Group 1: Financial Performance - Nintendo reported a quarterly operating profit of approximately 155.2 billion yen (about 998.5 million USD), which fell short of analysts' average estimate of 180.7 billion yen [4]. - Despite a sales surge of over 80% to 806.3 billion yen, the operating profit growth was limited to 23%, also below market expectations, leading to investor concerns about the company's profitability [4]. - The company maintained its annual revenue and operating profit guidance, predicting sales of 19 million units of the Switch 2 from June to March [11]. Group 2: Cost Pressures - The rising costs of DRAM and NAND storage components are significantly impacting Nintendo's profit margins, with DRAM costs increasing by approximately 41% and NAND costs rising by 8% in the fourth quarter [5]. - Market research indicates that the cost of game console storage modules could account for about 21%-23% of total hardware costs by 2026, further compressing hardware profit margins and future pricing flexibility [2]. - The ongoing demand for storage from AI data centers is exacerbating the supply constraints, leading to increased costs for consumer electronics, including gaming consoles [6][12]. Group 3: Market Strategy and Competition - Nintendo's strategy of lowering prices in the Japanese market to attract consumers has further diluted profit margins, raising concerns about the sustainability of this approach amid rising component costs [4][3]. - The company faces increasing competition from platforms like Roblox, which are capturing a younger audience, posing a long-term threat to Nintendo's market share [8]. - Analysts suggest that the ability to sell more software related to the Switch 2 is crucial for Nintendo's growth, as the current pressures from storage costs may not be the primary issue affecting profitability [8][10]. Group 4: Future Outlook - Nintendo's management acknowledges the potential for price increases on the Switch series due to rising storage costs, but they are exploring long-term procurement agreements to stabilize supply [10]. - The current trend of rising storage costs is expected to continue in the short to medium term, with potential for further price increases driven by AI and data center demand [12]. - The company is under pressure to enhance its software ecosystem to offset the impacts of rising hardware costs and maintain sales growth [12].