The Kyoto-based gaming company on Tuesday reported robust sales for the Switch 2 during the year-end shopping season, though the system is viewed as lacking high-profile game titles to drive demand.
The “Super Mario” maker maintained its annual earnings and hardware forecasts, which were viewed as having disappointed the market.
“Results are good with (the Switch 2) breaking records” but “not great,” Jefferies analyst Atul Goyal wrote in a client note.
Investor enthusiasm over the prospects for a successor to the wildly popular Switch helped push shares to a record high last year, but they have been sliding since November.
Early momentum for the Switch 2, which launched in June, is viewed as critical for building a user base to ensure the long-term strength of the system.
“The run is just starting and the platform is growing rapidly,” Goyal wrote. Nintendo extended the life of the original Switch with blockbuster titles including two major entries in “The Legend of Zelda” franchise.
Investors are also concerned about what impact rising prices of memory chips will have on Nintendo’s margins.
The company said the price surge is not significantly impacting earnings this financial year, but could pressure profitability if high prices persist over the long term.