Nintendo says it has no plans to ditch physical games, knows how much fans like it
(nintendoeverything.com)
Yet. They'll let Sony take the heat for going first, but we know this is what all three console manufacturers want sooner or later.
It's obvious that Game Key Cards are a step towards a gradual phase-out. Cartridges are a lot more expensive to manufacture than disks, and probably getting worse due to datacenters driving up the price of flash memory. It's not a question of if they'll ditch cartridges, but when.
I expect we'll continue to see carts for the remainder of the Switch 2's lifespan, but we may see a point at which they only do GKCs for late gen titles. And then after that, the Switch 3 will be all digital.