Nintendo Stock (NTDOF) Surges as Industry Vet Declares AAA Game Development ‘Financially Unsustainable’

Nintendo’s shares are rallying as gaming’s old guard grapples with bloated budgets and diminishing returns.

AAA games hit a breaking point

Veteran developers warn that blockbuster titles now require budgets rivaling Hollywood films—with far riskier payoffs. Meanwhile, Nintendo’s asset-light model and iconic IP portfolio position it as the rare profitable player in a sector drowning in ‘growth at all costs’ mentality.

Wall Street shrugs: ‘Just monetize the metaverse’

Analysts remain bullish on NTDOF despite industry headwinds—because when has speculative mania ever hurt gaming stocks? (Don’t answer that.) The House of Mario keeps printing money while rivals chase photorealism at the cost of profitability. Somewhere, a hedge fund manager is shorting common sense.

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Sakurai is far from the only video game developer who believes this. Several other prominent figures in the industry, including Sony’s (SONY) former PlayStation head Shawn Layden, have warned that the growing cost to develop AAA games is a problem the industry needs to tackle.

For Nintendo’s part, the company releases several AA games, those with smaller budgets and development times, between its AAA releases. This allows it to have a variety of exclusive titles for its consoles and frequent game releases. This is what partially led to the success of the original Switch and could see lightning strike twice with the Switch 2.

Sakurai’s Suggestion to Solve the AAA Development Slog

Sakurai didn’t just complain about growing development costs for AAA games. He also suggested a potential solution. The Nintendo veteran believes that generative artificial intelligence (AI) could be used to make game development more efficient.

Sakurai told IGN, “I think we are getting to the point where (AAA studios) have to change their way of working by using gen AI to improve work efficiency.” He also noted that “only the companies that successfully respond to these changes will be able to survive.”

NTDOF stock was up 2.06% as of Tuesday morning, building on a 49.82% rally year-to-date and a 58.56% increase over the past 12 months.

Is Nintendo Stock a Buy, Sell, or Hold?

Turning to Wall Street, the analysts’ consensus rating for Nintendo is Moderate Buy, based on eight Buy, two Hold, and a single Sell rating over the past three months. With that comes an average NTDOF stock price target of $91.34, representing a potential 4.7% upside for the shares.