Game On: Nintendo expects to sell 15M Switch 2 units in FY26

“Game On” is The Fly’s weekly recap of the stories powering up or beating down video game stocks.

NEW RELEASES: This week’s most notable new release is Bethesda’s latest first-person shooter “Doom: The Dark Ages,” which comes out May 15 for PC, PlayStation 5 (SONY), and Xbox Series X/S (MSFT). Also out this week is Capcom’s (CCOEY) “Capcom Fighting Collection 2,” a compilation of classic Capcom-made arcade games, including “Power Stone” and “Capcom vs. SNK.” The title releases May 16 for PC, PlayStation 4, Xbox One, and Nintendo Switch (NTDOY).

NINTENDO RESULTS: Last week, Nintendo reported year-over-year declines in fiscal 2025 earnings per share and revenue, with the company noting that Switch software sales grew steadily, though digital sales fell 26.5% year-over-year. Looking ahead, however, the company provided its outlook for fiscal 2026, guiding for 15M unit sales of its upcoming Switch 2 console in FY26, witht Switch 2 software sales expected at 45M units.

“Our new game system, Nintendo Switch 2, will be released on June 5, 2025,” the game maker said. “Nintendo Switch 2 is the successor to Nintendo Switch and features a larger, more responsive screen providing players with a smoother gameplay experience, new magnetic Joy-Con controllers, and more powerful processing speed and graphics performance that open the door to new ways to play. For software, we plan to release Mario Kart World and Nintendo Switch 2 Welcome Tour at the same time as the hardware launch, as well as The Legend of Zelda: Breath of the Wild – Nintendo Switch 2 Edition and The Legend of Zelda: Tears of the Kingdom – Nintendo Switch 2 Edition, which enhance the original games. Other software publishers also plan to release a wide variety of titles. We aim to accelerate the platform by working to expand hardware and software sales through conveying the unique appeal of Nintendo Switch 2 and continuously releasing new titles. With Nintendo Switch 2, users can experience exclusive games as well as compatible games from Nintendo Switch. For Nintendo Switch, we plan to release Pokemon Legends: Z-A in late 2025, and Metroid Prime 4: Beyond during 2025. Other software publishers are also planning to release many new titles. Nintendo Switch is enjoyed by many people around the world, and we will strive to maintain engagement by introducing new titles in addition to the existing titles.”

Click here to check out recent Media Buzz Sentiment on Nintendo as measured by TipRanks.

ELECTRONIC ARTS RESULTS: Also last week, Electronic Arts (EA) reported better-than-expected Q4 GAAP earnings per share and dnet bookings, with the company saying the “incredible success” of “College Football” and the “enduring strength” of “EA Sports FC” drove a record year for the game maker. “The incredible success of College Football and the enduring strength of FC drove another record year for EA SPORTS, while The Sims capped FY25 with a historic Q4,” said Andrew Wilson, CEO of Electronic Arts. “As we look to the future, we’re confident in our ability to execute across a deep pipeline – beginning this summer with the highly anticipated reveal of Battlefield, a pivotal step in delivering on our next generation of blockbuster entertainment.” Looking ahead, EA provided a conservative outlook for Q1 but gave upbeat net bookings guidance for FY26.

Following the report, no fewer than eleven securities analysts raised their price targets on the shares, with JPMorgan saying the firm increased estimates to reflect improving trends, but remains Neutral pending more consistent execution and “Battlefield” visibility “in an otherwise uncertain macro environment.” Morgan Stanley, meanwhile, argued that the success with non-sports titles, including “Battlefield,” is “key” to earnings revisions and multiple expansion from here.

Additionally, HSBC upgraded Electronic Arts to Buy from Hold with a price target of $190, up from $126, after the company reported an “all around beat” in fiscal Q4, boosted by strong game sales. The firm believes the video game publishing sector “should prove relatively resilient to near-term trade headwinds. HSBC has turned positive on the outlook for “EA FC25” following the Q4 recovery in monetization and engagement trends. It sees scope for further outperformance for Electronic Arts shares with the slated fiscal 2026 release of the next Battlefield franchise title and with FIFA hosting the Football World Cup next year.

Going the other way, however, MoffettNathanson downgraded Electronic Arts to Neutral from Buy with a $163 price target. EA is “back to painting a picture of Swiss clock-like regularity in FC’s growth,” and perhaps they are right given that the team behind “FC” and “Ultimate Team” is “clearly one of the best in the business,” the analyst told investors. In addition, enthusiasm for “Battlefield,” which the firm generally shares, has EA “once again brimming with confidence,” but with a share price “much closer to fair value,” the analyst added. After “a very healthy run-up in the stock” since January’s panic regarding “EA Sports FC,” the firm adds that it thinks “it’s time to take a more cautious stance.”

COURT DISMISSES FTC CHALLENGE: Last week, the U.S. Court of Appeals for the Ninth Circuit affirmed a district court’s denial of a motion by the Federal Trade Commission for preliminary injunctive relief against Microsoft’s acquisition of the video game developer Activision Blizzard. The panel held that the district court applied the correct legal standards and did not abuse its discretion, or rely on clearly erroneous findings, in holding that the FTC failed to make a sufficient evidentiary showing to establish the requisite likelihood of success on the merits of its claim. Thus, the FTC had not raised serious questions regarding whether the proposed merger was likely to substantially lessen competition in the relevant markets, the court determined.

MORE VIDEO GAME NEWS:

• Sony unveiled a new PlayStation studio called teamLFG
• Microsoft is cutting 3% of its headcount to reduce management layers, CNBC reports
• Deutsche Bank initiated coverage of NetEase (NTES) with a Buy rating