Can Switch 2 support Nintendo (NTDOY.US) reaching a market value of over a trillion? Gamers around the world are holding their breath in anticipation.

With Nintendo's (NTDOY.US) stock price repeatedly hitting new highs due to market expectations for the Switch 2 gaming console, the upcoming details of this new console could be a turning point. The new product launch on Wednesday is crucial for Nintendo - the stock price is approaching a seven-year high. With concerns about Trump's tariff policies potentially raising the price of the Switch 2, the performance pressure of the new console and its accompanying games has increased. In the past 12 months, Nintendo's stock price has risen by about 25%, far outperforming the Nikkei index, and its market value has surpassed the $100 billion mark for the first time. However, there has been a significant increase in short interest recently, indicating that some investors are betting on a price correction. "Unless the details of the Switch 2 exceed market expectations, the gains of the past year may have already priced in the good news," said Japanese stock analyst Pelham Smithers. After the new console is released, the attractiveness of the stock may decrease due to the fact that "the hype has already been fully realized." In mid-January, the stock price did fall slightly due to the lack of information in the teaser trailer for the Switch 2. The event on Wednesday will reveal more details, with third-party game compatibility and pricing strategy becoming the focal points of interest. Smithers pointed out, "If the price is as predicted to be between $449-499, it is already a high price point - not considering the tariff factors." He believes that games that support the original Switch cannot run (such as Sony's PS5 exclusive titles) will effectively stimulate demand. Investors are also looking forward to Nintendo announcing the lineup of exclusive games for the Switch 2, with the console expected to be released as early as June. TD Cowen analyst Doug Creutz said, "The key is to create an extremely attractive software lineup," such as a new version of Mario Kart and the Pokemon series, in order to maintain sustained demand after the launch. Creutz, who gave a "buy" rating, believes that Nintendo's uptrend is far from over, with an expected 20% upside in the coming year. He stated, "Their intellectual property continues to be successful, and I believe the market still does not fully appreciate this value." Earnings expectations for non-gaming IP such as "Super Mario Bros." movie have also boosted the stock price. Over the past two months, its forward P/E ratio has remained around 30 times, reaching levels similar to early 2018, significantly higher than its peers Sony and Microsoft Corporation (MSFT.US). The high valuation has also triggered more short selling bets. S&P Global, Inc. data shows that the stock's short interest ratio has risen to 1.8% of outstanding shares, approaching a one-year high. However, sell-side analysts generally remain optimistic, with 21 institutions giving a "buy" rating, only 8 "hold," and 3 "sell." Bulls believe that the Switch 2 is expected to rejuvenate the sales growth that slowed down due to the aging of the previous generation product. But it should be noted that the significant increase in the stock price makes it more susceptible to pressure in the event of the launch not meeting expectations. Following the details disclosure of the first Switch in early January 2017, Nintendo's stock price fell by about 6% that week. Sanford C Bernstein analyst Robin Zhu said that after the launch of Switch 2, "it wouldn't be surprising to see some profit-taking." He pointed out that, given the current high stock price, the drop "is likely to exceed the last hardware launch."