Do nothing. Win?
That’s more less Nintendo’s approach to AI, and the market is rewarding the Japanese video game maker for it, in Bloomberg’s analysis.
For the record, Nintendo is not a stellar stock. Investor uncertainty over its cheap Switch 2 pricing, which didn’t budge even as memory costs soared, helped cap off five straight months of decline, the longest loss streak sustained by the company in a decade.
But earlier this week, it showed some signs of life. On Tuesday, shares climbed as much as 6.8 percent in Tokyo for three days in a row, joining a broader rally of Japanese video game stocks, per the reporting.
It’s less a reflection on Nintendo, however, and more on shifting investor attitudes towards AI.
“This is all part of the rotation out of AI tech and into beaten-up names,” Amir Anvarzadeh, Japan equity strategist at Asymmetric Advisors Pte, told Bloomberg. Tuesday’s climb “underline the growing caution about the market — massive gains in AI tech which cannot be sustainable.”
Tomo Kinoshita, global market strategist at Invesco Asset Management Japan, speculated that it was a sign of investors hedging their bets ahead of Nvidia’s quarterly earnings, which were released Wednesday.
“Nvidia often fails to live up to the market’s sky-high expectations, and AI stocks can suffer as a result,” he said. “I expect many investors are temporarily selling AI stocks in preparation, which is driving the rotation.”
That prediction seems to have been vindicated. Despite clinching another record quarter, Nvidia’s numbers were less impressive than investors hoped, sending shares tumbling by a few percent. Its profits literally doubling from the same period a year ago was apparently not enough.
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