Nintendo Co shares could extend their record climb beyond the upcoming Switch 2 launch on anticipation of new hit games and other content surrounding the console’s release.
The Mario Kart creator’s focus on success in games, while leveraging its intellectual property into movies and theme parks, makes it look like a safe bet for tech investors amid the volatility sparked by Chinese AI start-up DeepSeek (深度求索), analysts say.
Since the success of The Super Mario Bros Movie in 2023, the market has started “to value Nintendo as a content creator rather than just a hardware manufacturer,” JPMorgan Chase & Co analyst Junko Yamamura said.
Photo: AFP
She expects the stock to continue rising on the company’s “unique” software selling strategy, which includes character merchandise and mobile games.
The stock fell in the wake of the new console announcement two weeks ago on lack of surprise, but has since resumed its rise. The shares are up about 25 percent in the past 12 months, more than double the rise in Japan’s benchmark TOPIX gauge, taking its market value to an all-time high of more than US$87 billion.
While results due on Tuesday will likely show continued weakness on waning demand for the almost eight-year-old Switch, sales of its successor should help drive a revival from the fiscal year starting April, Yamamura wrote in a report earlier this month.
The company has promised more details on its new console in April, but the launch date is yet to be announced. While execution risk remains for the hardware, investor optimism is growing on hopes of new blockbuster software titles from Nintendo and third-party developers, as well as other ways to capitalize on the company’s trove of beloved characters.
“It’s not the Switch 2 itself that’s going to drive earnings,” Wedbush Securities Inc analyst Michael Pachter said. “It’s software sales, Nintendo online subscriptions, movie royalties and the opportunity for theme parks to become something bigger.”
Pachter expects Nintendo to release a new multiplayer game, Mario Kart 9, in tandem with the Switch 2, boosting its shares. Until the console’s official launch, however, the stock might see volatility around leaks on the details, he cautioned.
While sales of the Switch 2 could boost earnings, the console might also expose Nintendo to tariff risks. A high blanket duty on all imports under US President Donald Trump’s administration would hurt the company, said Pachter, who predicts around 40 percent of Switch 2 sales will be in the US.
However, Nintendo’s focus on entertainment content, rather than hardware, provides more shelter from geopolitical tensions compared with some other tech names. Its shares also saw support amid the recent rout in chip stocks on worries tied to DeepSeek.
Companies with strong content offerings are seen as attractive safe havens in tech as the AI boom unfolds, UK-based analyst Pelham Smithers wrote in a note this week. “The DeepSeek scare has sent the AI infrastructure story into a tailspin, leading to a rotation back into videogame stocks” like Nintendo, which does not rely on high-level chips or data centers, he wrote.
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