Categories: Gaming

AMD’s Gaming Sector Faces New Challenges: Will 2024 Bring More Setbacks?


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Many things are progressing positively for Advanced Micro Devices (NASDAQ: AMD) at present. The firm has been increasing its market share in the PC CPU sector, its server CPUs are performing well, and its AI accelerators have swiftly evolved into a multibillion-dollar enterprise.

Conversely, the gaming sector tells a different tale. AMD’s gaming revenue plummeted 69% year-over-year in the Q3 2024, landing at only $462 million. For context, the data center division generated $3.5 billion in revenue for the same quarter.

Two factors are influencing this situation. To begin with, AMD manufactures semi-custom chips for the leading gaming consoles. The existing generation of consoles finds itself in the later stages of their life cycles, so it is understandable that demand has declined.

This revenue stream is expected to rebound within the next few years, contingent upon when Sony and Microsoft unveil new consoles. The forthcoming consoles will probably utilize AMD chips.

Secondly, AMD is trailing significantly behind Nvidia in the gaming GPU segment. Although AMD does not release specific figures for gaming GPU revenue, the firm indicated in its earnings call that sales in gaming GPUs fell year-over-year in Q3. The firm partially attributed this decline to the impending release of its next-generation graphics cards, yet Nvidia succeeded in rising its gaming revenue during its latest quarter in spite of also preparing new products.

AMD’s forthcoming Radeon RX 9000 series graphics cards may assist in enhancing gaming revenue upon their debut in the first quarter; however, the company will be competing against Nvidia’s newly launched RTX 50 series graphics cards. Nvidia’s latest products feature advanced AI-driven technology, and there is scant reason to assume AMD’s competitive position will significantly improve within the more expensive segments of the market where Nvidia usually excels.

Historically, AMD has been much more competitive in the lower tiers of the market, where prices remain under $300. The RX 7600 card is AMD’s latest budget offering, even though older graphics cards like the RX 6600 are still readily available. Nvidia has largely overlooked this market segment — even the four-year-old RTX 3060 continues to retail for approximately $300.

As AMD competes with Nvidia at the high end, an unexpected resurgence from Intel (NASDAQ: INTC) will present significant rivalry in the low-end arena. Intel made its entry into the graphics card market in late 2022 with the Arc Alchemist series, but software complications hampered the initiative. The firm persisted, and its second-generation Battlemage cards boast much greater capabilities.

Intel’s B580 was labeled “the new $249 GPU champion” by reviewers at Tom’s Hardware. The company has significantly enhanced its software drivers and introduced sufficient performance improvements to render its new midrange graphics card a very appealing option for gamers on a budget. The B580 outperforms AMD’s similarly priced RX 7600, even surpassing the more expensive RX 7600 XT on average.

Intel also provides the $219 B570, which reviewers at Ars Technica referred to as “the cheapest good graphics card.” Intel has included sufficient performance at an affordable price to make the B570 an attractive choice for the most budget-conscious PC gamers.

This is the landscape that AMD faces as it prepares for the release of its new RX 9000 graphics cards. The company is expected to start with higher-end models before gradually expanding its range, allowing Intel several months as the uncontested budget gaming leader. Although Intel captured little market share previously, its Battlemage graphics cards appear set to be significant triumphs. Reports indicate they are selling out everywhere, with prices elevated due to high demand.

Today, AMD boasts a far more diverse portfolio than it did just a few years ago. The gaming sector remains significant, yet the firm’s PC CPU, server CPU, and AI accelerator divisions can foster growth even if gaming sales continue to falter.

Nonetheless, gaming may persist in hindering the company’s overall performance this year, even with the RX 9000 launch on the horizon. With Nvidia reigning supreme in the high tier and Intel vying for the low tier, AMD could witness a further contraction of its graphics market share in 2025.

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Timothy Green holds positions in Intel. The Motley Fool has interests in and endorses Advanced Micro Devices, Intel, Microsoft, and Nvidia. The Motley Fool suggests the following options: long January 2026 $395 calls on Microsoft, short February 2025 $27 calls on Intel, and short January 2026 $405 calls on Microsoft. The Motley Fool maintains a disclosure policy.

AMD’s Struggling Gaming Business Could Take Another Hit This Year was initially published by The Motley Fool


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