OSAKA, Japan—Nintendo Co. raised its sales forecast for the Switch game machine and said momentum would pick up further next year, affirming investor views that the handheld-hybrid console has turned into a highly profitable success.

Nintendo said Monday it expected to sell 16.7 million units of the Switch by March next year, topping an earlier forecast by four million units. It expects to sell 55.5 million copies of games for the platform, up from an earlier estimate of 40.5 million.

Since...