Nintendo (NTDOY) stock has declined by over 17% in the past month due to surging memory chip costs. RAM prices have seen a meteoric rise in just the past few months due to AI demand. Many investors believe Nintendo can suffer from this, as this can compress the margins on its Switch 2 consoles.
Unexpectedly, this has been named as one of the best buys for 2026 by certain analysts. Barron’s columnist Tae Kim believes that NTDOY is one of the best tech stocks you can buy for 2026.
Again, this comes despite Nintendo facing tariffs, rising prices for all sorts of electronics, and consumers showing signs of weakening.
Barron’s has been consistently bullish on Nintendo throughout 2025 and expects the stock to outperform estimates even though Nintendo will be absorbing higher production costs by not changing its pricing. This is because they expect strong Switch 2 performance, with Nintendo raising its Switch 2 sales forecast from 15 million to 19 million units for fiscal 2026, with 10.36 million units sold as of Sept. 30. The console’s performance has “far exceeded market expectations,” according to Toyo Securities analyst Hideki Yasuda.
The argument is that higher sales volumes will compensate for the margin compression. Moreover, Nintendo is seeing strong software sales. Pokémon Legends: Z-A sold 5.8 million units in its first week. This is a game that costs anywhere from $60 to $70.
Wall Street is not blind to the strong sales volumes of the Switch 2, but electronic components getting more expensive can turn into a bigger headache for the company next year. Gaming consoles include components that are also in demand for AI uses, and this can cause costs to swell if demand remains strong.
NTDOY stock gained over 70% from the start of 2025 to its peak this year in August 2025. The current selloff has not wiped out NTDOY’s gains, and it is still up 21% year-to-date (YTD). Investors have taken profits as they believe it’s a good idea to do so before component costs climb higher.
The only way Nintendo will be able to reverse this trend would be to show that it can deliver strong console sales continuously and offset any costs from rising RAM and chip prices.
