In a sign of just how bad things are for Microsoft (NASDAQ: MSFT)'s Xbox 360 and the Sony (NYSE: SNE) PS3, Nintendo has now passed every Japanese company except Toyota (NYSE: TM) to become the No.2 firm there in terms of market cap. According to the FT: "Many analysts feel Nintendo is still not overvalued, in spite of its high share price. The company is known to be conservative in its profit forecasts, and foreign exchange rates in the US and Europe are expected to give its bottom line a boost."

But, it is bizarre that Nintendo would now be ahead of companies like Toshiba and cell phone company KDDI.

It is a measure of just how large investors believe that the game console market is becoming. Nintendo's Wii outpaces sales of Xbox and PS3 in virtually every region around the world. Like PCs and automobiles, Wall Street must assume the gaming will move into fast-growing regions like China and India. In other words, Nintendo's sales could continue to move up fairly rapidly for several years.

If things go well, perhaps Nintendo can buy Sony.

Douglas A. McIntyre is a partner at 24/7 Wall St.