Nintendo has revised its sales forecast for the Switch 2 console for fiscal year 2025 (April 2025 to March 2026), projecting significantly higher overall performance. However, because hardware gross margins are lower than software, and software sales have yet to match the hardware's popularity, overall profit margins are expected to decline. Substantial profit gains will only materialize once the hit software titles are released.
Strong global sales
Reports from Nikkei, Bloomberg, and CNBC state that Switch 2 sales are strong in Japan, Western markets, and Southeast Asia. Unit sales are now forecast at 19 million units, up from the previous 15 million. Nintendo has raised its fiscal year 2025 revenue forecast to JPY2.25 trillion (US$14.6 billion), up from the previous JPY1.9 trillion estimate. Operating profit is projected to increase from JPY320 billion to JPY370 billion, while net profit is expected to rise from JPY300 billion to JPY350 billion.
According to the gaming magazine Famitsu, domestic Switch 2 sales reached an estimated 2.46 million units within five months of launch, outperforming the original Switch's 1.31 million units and Sony PlayStation 5's 580,000 units. The Switch 2 made improvements based on user feedback from the original Switch, successfully sustaining user engagement.
User engagement and platform momentum
Nintendo President Shuntaro Furukawa stated in a financial results call that the Switch 2 surpassed the debut performance of any previous console. However, cumulative sales have not yet exceeded Nintendo DS, the company's best-selling platform, though he expects the Switch 2 could eventually surpass it if the current momentum continues.
Toyo Securities senior analyst Hideki Yasuda reported that global Switch 2 sales reached 10.36 million units from April to September 2025, achieving 55% of the revised annual target and far exceeding market expectations. Considering that the second half of fiscal year 2025 (October 2025–March 2026) is unlikely to underperform, he expects forecasts will likely be revised upward again, with total annual sales potentially exceeding 20 million units.
Profit margins under pressure
However, the operating profit margin for fiscal year 2025 is forecast at 16.4%, down 7.8% from 2024. This is because hardware generally has lower gross margins than software. When hardware sales are strong but software sales lag, overall margins decline. As hardware adoption increases, software sales will gradually rise and boost profits.
Additionally, supply constraints remain. Furukawa admitted that while overseas Switch 2 inventory is adequate, availability in Japan is still limited. Fortunately, production capacity has increased since launch, and the situation is improving.
Supply and tariff challenges
Another factor affecting profits is the Trump administration's tariff policy. Switch 2 consoles are mainly produced in Vietnam by contract manufacturers and exported to the US, with prices not yet adjusted for tariffs. Furukawa noted this impact amounts to several tens of billions of yen, already affecting the first half of fiscal year 2025.
Nintendo plans to maintain console sales through key franchises like Super Mario and Pokémon, applying the successful strategy from the original Switch to Switch 2.
In October 2025, Nintendo released Pokémon Legends: Z-A and offered bundles including the game and the Switch 2 console. Kirby Air Riders and Metroid Prime 4: Beyond are also scheduled for 2025 releases. In January 2026, Nintendo will release a Switch 2 version of the original Switch hit Animal Crossing: New Horizons alongside new titles to expand the platform's user base.
Article edited by Jerry Chen
