Bluntly: Because whatever delusions you may have the to the contrary, they're smarter than you. Or at least more aware of the realities of engineering.I'm just saying that if I can figure this out, why can't a multi-billion dollar company like Nintendo?
There's an old maxim about tradeoffs: "Good, fast, cheap. You can only have two of these".
This generally holds up to be true, especially in technology, and can easily be adapted to other tradeoffs, such as "Powerful, Reliable, Affordable". You might have noticed that while the PS4 is more powerful than the Switch, it's also almost twice as expensive...and still sells at a loss. I think the numbers I remember were that the sale price for every PS4 unit netted Sony -$60. To reiterate, they sold those for $550, when it cost them $610 to produce them. Conversely, the Switch sold for $294, and Nintendo was selling those at a profit.
Nintendo's priorities have been towards the affordability and reliability side of things. They don't try to be the powerhouse of consoles...and frankly their franchises and brand identity don't really benefit from trying.
Ask yourself this: To what point and purpose do you think Nintendo would want to sacrifice their affordability to create a more powerful console? Power without a purpose behind it is just wasted energy. Pumping MORE POWER into something does not make it better if that power does not enable it to do things it was struggling with.