Nintendo's recent climb to a record high is looking increasingly stretched as investors wait for news on the successor to its aging Switch game console.

Shares of the Mario and Zelda creator have soared 47% in the past year, compared with a 28% gain in Topix. Expectations for a new machine that some have already dubbed the "Switch 2” have fueled gains, although there has been no official word yet from the company. Hope for more popular films featuring Nintendo characters and the ongoing boom in Japan’s stock market have also contributed.

The stock has outpaced gains in console rivals Microsoft and Sony Group over the past couple of months. It’s trading at a more expensive earnings multiple than an index of game peers for the first time ever and at the largest premium to analyst targets in at least two decades.

"The share price looks overvalued,” Minami Munakata, an analyst at Goldman Sachs Group, wrote in a report. "In our five-year earnings estimates, we do not see profits during the next-generation hardware cycle surpassing peak profits of the Nintendo Switch cycle.”

Nintendo shares have typically depended on new hardware launches every five or six years, so they’re looking surprisingly strong with the Switch now nearly seven years old. While hit games and "The Super Mario Bros. Movie" have helped support earnings, profit levels peaked with console unit sales three years ago.

Sony’s PlayStation 5 was last year’s best-selling console in the United States in both units and revenue, according to data from Circana. Microsoft’s Xbox strategy is led by the Xbox Game Pass subscription, which has likewise been growing and putting pressure on rivals to offer a similar service.

Nintendo’s valuation has surged despite competition concerns, trading now at 25 times forward earnings estimates versus its five-year average of 18 times. That’s made it more expensive than the Solactive Video Games & Esports Index for the first time since the gauge was created in 2019.

Details on the keenly awaited console are the key factor for the stock this year, with market consensus for a launch between September and November. Key points include finding the best price point and so-called reverse compatibility, or the ability to play games from older consoles. Omdia expects Nintendo to debut a new console this year with an 8-inch LCD screen.

"We do not think the new console will be as successful as the Switch, and see potential profit-taking after the announcement,” Macquarie Group analyst Yijia Zhai wrote in a recent report, downgrading Nintendo to neutral.

Goldman’s Munakata does not expect the Switch follow-up to increase Nintendo’s total addressable market, but says that could change if the console "turns out to be new concept hardware rather than a successor along the same lines as the Nintendo Switch.”

In the meantime, Nintendo may face selling pressure around its results report due Feb. 6 or the following one in May, according to CLSA Securities Japan analyst Jay Defibaugh. He maintains a sell rating, noting the shares may have been pumped up by expectations of increased investment from Saudi Arabia’s Public Investment Fund or funds shifting out of China.