Nintendo tops estimates with US tariff refunds and Switch 2 games
Sales of Switch 2 software over the period were led by Tomodachi Life: Living the Dream and Pokemon Pokopia
Published Thu, Aug 6, 2026 · 03:22 PM — Updated Thu, Aug 6, 2026 · 04:02 PM
NINTENDO reported stronger-than-expected earnings buoyed by tariff refunds from the US and strong sales of a pair of in-house titles for its flagship Switch 2 console.
The Kyoto-based company posted net income of 147.4 billion yen (US$934 million) for the June quarter, compared with an analyst consensus estimate of 77.8 billion yen. A large portion of that came from what the company called a reduction of cost of sales, related to refunds of import tariffs that the US had imposed in 2025 and later rescinded.
Revenue declined by nearly 10 per cent, to 517.8 billion yen, but still surpassed the market expectation of 448.8 billion yen.
The boost to earnings from the reversal of tariffs has shown up across Japan’s electronics sector this summer, including in the results of Sony Group and Canon.
Nintendo and Sony both raised console hardware prices over the past year as a result of the associated higher costs. The Kyoto games pioneer also recorded a 39 billion yen positive effect on its sales from the weakening yen.
Sales of Switch 2 software over the period were led by Tomodachi Life: Living the Dream and Pokemon Pokopia, a pair of somewhat surprising hits developed in-house. Tomodachi Life sold 7.94 million units by the end of the quarter.
Still, Nintendo has a significant task ahead ramping up game sales, as it achieved only 9.5 million units across the three months for the Switch 2. That is far below the nearly 34 million software copies it shifted on the nine-year-old Switch platform.
Nintendo sold 3.82 million units of the Switch 2, which was seen as potentially moving up demand from later in the year as consumers sought to get out ahead of a Sep 1 price hike for the console across international markets.
“Hardware sales likely benefited from last-minute demand ahead of price increases,” said Hideki Yasuda of Toyo Research and Advice.
“On the other hand, software sales lacked momentum, making a stronger release line-up toward the year-end shopping season highly desirable. Hardware profitability is expected to deteriorate through the end of this year, so the key will be how effectively the company can drive software sales.”
The Switch 2 made its debut last summer at US$449.99 in the US and also had a Japan-exclusive model sold at a loss to attract the biggest possible audience.
Nintendo had planned to gradually narrow those losses through manufacturing efficiencies, tighter marketing spending and a stronger software lineup that could offset the hardware deficit. But April’s Liberation Day tariffs by the White House and an AI-driven surge in the cost of key components such as DRAM and Nand memory chips complicated the picture.
High-margin software sales remain critical to the company’s profitability. Nintendo has released several successful titles, including Yoshi and the Mysterious Book and Star Fox, alongside the popular film sequel The Super Mario Galaxy Movie.
However, the blockbuster sales investors have come to expect from the company’s flagship franchises, such as Super Mario and The Legend of Zelda have not yet shown up on the year-old console.
“We expect some investors to remain concerned about rising component prices and tariffs, as well as the lack of an outsized upcoming hit,” said Nick McKay, an analyst at Freedom Capital Markets.
“Microsoft has said console storage component prices are expected to increase more than fivefold by the 2027 holiday season compared with fall 2025, with memory costs following a similar trajectory.” BLOOMBERG
