Nintendo has raised its forecast for Switch console sales and profit for the year after reporting better-than-expected earnings for the holiday quarter.

The Kyoto-based company now expects to sell 15.5 million Switch units in the fiscal year ending in March, up from 15 million, and it also raised its revenue, operating profit and net income guidance.

The December quarter’s operating profit of ¥184.5 billion ($1.2 billion) beat the average analyst estimate of ¥181.3 billion, though it fell shy of its performance in the same period a year earlier. Sales in the three months ending in December were ¥598.6 billion, Nintendo said Tuesday, compared to an analysts projection of ¥575.5 billion.

Nintendo’s shares are at an all-time high this year, after the company’s successful expansion into cinema with The Super Mario Bros. Movie and the award-winning debut of The Legend of Zelda: Tears of the Kingdom sustained sales in 2023. Expectations for a next-generation Switch also play into the lofty valuation, as investors look past the next few quarters for a major boost to come in the holiday period.

Those hopes firmed up with an Omdia forecast in January pointing to a new 8-inch Switch device coming in 2024. Now seven years old, the original hybrid-handheld console has outlived most rivals thanks to a succession of hit releases from Nintendo’s creative studios.

Last year, however, it fell behind Sony Group’s surging PlayStation 5, which became the best-selling console in the U.S., according to Circana. Microsoft’s Xbox division also gained a big hit in January with Palworld, a game drawing inspiration from Nintendo’s Pokemon franchise, which has attracted millions of players to the Xbox Game Pass subscription service.

Nintendo has been tight-lipped about any Switch successor plan, though it would obviously benefit from a hardware upgrade in contending with Sony’s expanding PS5 user base and Microsoft’s cloud-gaming push. The absence of marquee titles on its software release schedule this year is seen as another sign that the company is potentially holding releases back until it has the new platform in place.

"The Switch has run its course, which is why Nintendo had no choice but to release the next device this year,” industry analyst Serkan Toto said ahead of the earnings report. "Nintendo is keeping their blockbusters in the oven for now, as they must make sure to have a killer lineup for when the Switch successor launches.”