Nintendo shares fell sharply on Monday after the Japanese videogame giant clocked weaker-than-expected annual earnings and flagged a disappointing outlook for the current year. 

Nintendo Co Ltd (TYO:7974) slid as much as 9% to 6,895.0 yen, and was among the worst performers on the Nikkei 225 index, which rose 0.8%. 

Nintendo’s operating profit for the year to March 31 jumped nearly 28% to 360 billion yen ($2.29 billion), aided by a near 100% jump in net sales. But the profit figure still fell short of market expectations.

The company forecast operating profit for the current fiscal year at 370 billion yen, well below market forecasts of 480 billion yen. 

Sales are expected to fall 11.4% year-on-year to 2.05 trillion yen.

Nintendo forecast softer sales for its flagship Switch 2 console due to higher prices stemming from the shortage of memory chips and other components. 

The company said it will raise the retail price of the Switch 2 in European, U.S. and Japanese markets by 7% to 20% later this year, due to higher component costs, especially memory. 

This in turn is expected to hurt sales of the blockbuster console, with Nintendo guiding fiscal 2027 Switch 2 sales of 16.5 million units, weaker than 19.86 million units in the prior year. 

While software– specifically videogame sales are expected to pick up, Nintendo’s margins on the Switch 2 are also expected to decline due to higher component costs.

Sales of the console’s predecessor, the Switch, are expected to peter out through the current year. 

The Switch 2 marked a blockbuster launch last year and was one of the fastest-ever selling consoles. But this momentum is now expected to fade due to higher console prices. 

This stems chiefly from a severe shortage in memory chips, due to outsized demand in the artificial intelligence industry. 

Nintendo’s upcoming launches of first-party games in 2026 also largely underwhelmed, although the company did flag a whole host of new third-party releases in the coming months.