Soaring Memory Costs Sink Nintendo Shares; Goldman Says Selloff Is Buy-The-Dip Opportunity
Prices for LPDDR5 DRAM (Low-Power Double Data Rate 5 Dynamic Random-Access Memory) tripled this fall, as we noted in October in "Chatbots: Soaking Up the World's Power, Water, and Memory." LPDDR5 is a form of system memory that delivers higher bandwidth and greater power efficiency than prior generations, making it well-suited for laptops, smartphones, and the explosion in demand for AI-enabled devices.
Update: two months later https://t.co/Q4TPIrpzxV pic.twitter.com/O3KTKxZOVE
— zerohedge (@zerohedge) December 22, 2025
Goldman analyst Maho Kamiya told clients on Tuesday that concerns about rising memory prices and the absence of top-down tailwinds have sent Nintendo shares spiraling. After a 27% decline from its early November peak, the analyst asks whether the selloff has become overdone.
"Some investors think that Nintendo will be selling Switch 2 at a loss and gross profit falling into the red. While rising memory prices are a risk factor that could depress hardware margins, we think concerns are somewhat excessive," Kamiya said.
In a separate report, Goldman analyst Minami Munakata maintained her bullish view on Nintendo and also addressed rising memory price concerns:
In light of rising memory prices, we note some discussion in the equity market assuming that Nintendo Switch 2 hardware could fall into the red at the gross profit level. While it is true that rising memory prices are a risk factor that could depress hardware margins, we think concerns are somewhat excessive, because:
Nintendo holds a certain amount of component inventory and does not conduct spot transactions with its supply chain, so we believe the short-term earnings impact will be minor (our assumption),
The Nintendo Switch 2 is expected to see cost reductions from mass production going forward, and
Management has commented that, as a general rule, its policy is to pass on cost increases, including tariffs, to the selling price.
We re-emphasize that in the dedicated game console business, content such as software is highly profitable and is the source of profits for the business model. Nintendo has built a solid position by owning numerous titles with high global popularity and name recognition, such as Super Mario Bros. and Pokémon. We expect that, similar to the PS4-to-PS5 transition, an expansion in revenue per hardware unit, driven by software backward compatibility and an increase in the third-party title pipeline, will drive earnings in the Nintendo Switch 2 generation.
Munakata even told clients that the recent stock plunge in Tokyo is an "opportunity" to "add to position"…
We see the recent share price correction as an opportunity to add to positions ahead of full-scale earnings growth accompanying the Nintendo Switch 2's penetration from FY3/27, and the April 2026 release of The Super Mario Galaxy Movie, a prime example of IP utilization. We maintain our Buy rating.
The chart:
We suspect the conversation about soaring memory prices will be a hot topic for some tech companies during the next earnings season.
Tyler Durden
Wed, 12/24/2025 – 09:05