Several analysts revised their outlook on Nintendo in late 2025 following the mid-year launch of its next-generation console, the Switch 2, with concerns mounting around valuation, margins and execution risks despite strong early demand.
Wolfe Research downgraded Nintendo to Underperform from Peer Perform on November 5, 2025, setting a price target of ¥12,000. Analyst Galen Supino warned that Switch 2 sales could be heavily front-end loaded, limiting longer-term upside, while gross margins may fall short of levels achieved during the original Switch cycle. Wolfe pointed to rising production costs and the challenge of sustaining momentum once early adopters have already upgraded.
Wedbush Securities took a similarly cautious view earlier, downgrading the stock to Neutral from Outperform on September 17, 2025. Analyst Alicia Reese said the market had already priced in a near-perfect outcome for both hardware and software sales. She cautioned that expectations for the Switch 2 appeared ambitious, especially as competition in the gaming market intensifies and consumers face broader economic pressures.
Analysts also flagged structural headwinds weighing on profitability. Higher prices for memory chips and other core components are expected to squeeze margins across the console industry. In addition, Wedbush highlighted potential tariff risks, noting that products manufactured in Vietnam, a key production hub for Nintendo, could face tariffs of up to 20%, potentially forcing price increases in the U.S. market.
Valuation has been another sticking point. By late 2025, Nintendo shares were up roughly 40% year-to-date, prompting concerns that the stock had become stretched relative to its long-term earnings growth, particularly if Switch 2 sales normalize faster than investors expect.
Despite the downgrades, not all analysts have turned bearish. Goldman Sachs reiterated a Buy rating on December 24, 2025, citing confidence in Nintendo’s software pipeline and its ability to monetize its intellectual property ecosystem. Freedom Capital Markets also upgraded the stock to Strong Buy earlier in the week, arguing that a recent pullback offered an attractive entry point for long-term investors.
Overall, while the Switch 2 launch has reinforced Nintendo’s market relevance, analyst sentiment in late 2025 reflects a growing divide between optimism over the company’s strategic positioning and caution over near-term valuation and execution risks.
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