Actually, Switch may still be growing. There is a very good chance that the current FY will be more profitable than the last one. As long as install base increases, software continues to sell well, subscriptions increase, etc... then Switch is growing their business.
The biggest obstacle to growth is actually launching a new console. When that happens, install base becomes 0 again. They have to rebuild their profit making ability from scratch all over again. I do not think Nintendo will be eager to go to that point again considering that profits are currently at unprecedented levels. And as much as investors like growth in profits, they really, really hate a sharp decline in profits, and that is what will happen when new hardware is released. Of course, a Switch 2 does need to come eventually, and that is why we are debating when it will come. However, it's not going to come next year. They would be sabotaging the best profits that any gaming company/division has ever made.
Switch is still selling, yes, but that's just its path to achieving its sales plateau, but if they wish to meet or exceed that in the next go round, growth will be necessary, which means addressing an even wider swath of demographics not currently addressed, and that is mostly a content and UX problem that current hardware cannot resolve.
Nintendo cannot and refuses to cover every possible demographic and there is an upper limit to what software they will be able to get with current hardware, even internally, as developers begin to push against hardware limitations and see new achievable techniques at affordable hardware manufacturing costs. This is not debatable; if such a thing weren't true, that growth did not demand new hardware in this space, console hardware would all be on a 10-year cycle or more industry-wide since inception of the market.
Specifically, Switch's success can be partly attributed to its ability to run modern game engines and middleware that its predecessors absolutely could not, being caught in the transition to things like UE4 as they were, and we are currently in the middle of another transition to updated and more performant engines and middleware. If having hardware that takes advantage of modern dev tools was key to Switch's success (as everyone
should agree with), it is only right to assume that having new hardware to take advantage of this current transition is far more preferable sooner than later.
No company is ever eager to "start from 0", but that is the nature of the console gaming industry; Nintendo practically established most of the expectations it operates under and if they didn't like them, they could have set different expectations or... there's always developing for PC. Besides, as was pointed out by
@ILikeFeet , the "start from 0" isn't quite the thing it once was. They have the bones of a lightweight and highly-competent OS/UI, an online service to leave as is instead of starting over completely (replete with all it currently offers) and a software library almost completely expected to be compatible on new hardware. They don't have to re-invent the wheel and make for a fractured and divisive new hardware experience (as they have admittedly done in the past).
"Sabotaging profits" would suggest that there is no possibility of selling old hardware concurrently, and as I have pointed out in the past, successful hardware has a long and storied history of selling well beyond the moment new hardware is released, which will absolutely ensure profit retention during the transition, as it has with successful consoles of the past.
And lastly, if they gamble that they can hold out longer and gambled wrong, they're then sabotaging future profits in the name of short-term gains. I wonder which one is worse for their business in the long term.