Nintendo's core audience has always been children, their parents, and casual players, but with some console cycles they expand into other niches, as has (resoundingly) been the case with the Switch; the Switch appealed to virtually anyone interested in playing games on the go, including people who otherwise don't usually buy the newest Nintendo console/games for their polish and/or family-friendliness. For a long time it was by far the most convenient way to play Skyrim or Witcher 3 or what-have-you on buses, planes, at school etc.

The Steam Deck doesn't cut into Nintendo's core audience, but it does draw away people who would have bought the Switch 1/2 for those reasons -- the audience that made the Switch 1 such an overwhelming success. Anecdotally, I've had multiple non-techies bring up the Steam Deck unprompted, usually with an impression of 'the Switch but better' and/or 'more adult-oriented'.

Historically, when the market they created starts to become saturated, Nintendo starts looking to pivot. So the Steam Deck might not kill the Switch 2, but I'd be very surprised if it doesn't kill the Switch 3.