RAM shortages are reportedly causing a larger decline in the stock price of Nintendo in comparison to that of Sony. Here’s why.
According to an analysis conducted by Yahoo Japan (via Genki_JPN on Twitter/X), RAM shortages are bringing a larger decline in the stock price of Nintendo in comparison to that of Sony. While market shares of Nintendo reached their highest level last summer since listing, they have trended downward from November and recently fell below the 10,000-yen mark for the first time since April. This decline stood out even more so given that Japan’s overall Nikkei Stock Average continues to hit record highs.
The recent rise in memory prices is driven largely by the global AI boom. With regards to Nintendo, these higher component costs are widely believed to put pressure on profit margins for the Switch 2. On the other hand, Sony Group, which also operates a major gaming business, has seen only a modest impact on its stock price. This is mainly due to key structural differences between both companies.
Sony has pointed out during investor briefings that it has already secured the necessary components, including memory, for the current fiscal year, and that rising prices will not materially affect profitability through the fiscal year. Nintendo, on the other hand, has not been able to offer a similar guarantee. President Shuntaro Furukawa has only suggested that the company intends to respond through medium- to long-term procurement strategies. This uncertainty translates directly into risk for investors.
Additionally, Sony’s business is far more diversified. Beyond games, the company generates substantial revenue from music, movies, and other entertainment segments. Meanwhile, Nintendo’s core business is almost entirely video games. As such, Switch 2 hardware represents a significant portion of expected revenue. If memory shortages or higher costs squeeze margins on the console, the impact on Nintendo’s overall financial performance is more severe.
The third key difference lies in recurring revenue. More than 20% of Sony’s game-related revenue comes from PlayStation Plus, providing a relatively stable income stream even if hardware sales slow down. On the other hand, Nintendo Switch Online accounts for only a small percentage of Nintendo’s revenue, leaving the company more reliant on hardware and software sales.
