A lot is going right. Advanced Micro Devices(NASDAQ: AMD ) just now. The company is gaining share in the PC CPU market, its server CPUs are selling well, and AI accelerators have quickly turned into a multi-billion dollar business.
The game business is another story. AMD’s gaming revenue fell 69 percent year over year to $462 million in the third quarter of 2024. By comparison, the data center segment generated $3.5 billion in revenue during the same quarter.
There are two issues in the game. First, AMD offers semi-custom chips for major game consoles. The current game consoles are now in the last part of their life cycle, so it makes sense that the demand is decreasing.
This revenue stream should bounce back sometime in the next few years. Sony And Microsoft Start new consoles. The next generation consoles will likely be powered by AMD chips.
Secondly, AMD remains in second place behind Nvidia in the gaming GPU market. Although AMD did not release gaming GPU revenue, the company announced Incoming call Gaming GPU sales fell year over year in the third quarter. The company blamed the launch of its next-generation graphics cards in part for the decline, but Nvidia managed to increase gaming revenue in the latest quarter despite developing new products.
AMD’s new Radeon RX 9000 series graphics cards will likely help boost gaming revenue when they launch sometime in the first quarter, but the company will be opposed to the new RTX 50 series graphics cards from Nvidia. Nvidia’s new cards bring some fancy AI-powered technology, and there’s little reason to believe that AMD’s competitive position will improve meaningfully in the expensive segment of the market that Nvidia wants to dominate.
AMD has historically been very competitive in the lower end of the market, with prices below $300. AMD’s RX 7600 card is the company’s latest budget option, although older-generation graphics cards like the RX 6600 are widely available. Nvidia has been ignoring this segment of the market for a long time – even the four-year-old RTX 3060 still sells for around $300.
When AMD fought with Nvidia at the top of the market, it made an amazing comeback Intel(NASDAQ: INTC ) It offers strong competition at the lower level. Intel entered the graphics card market in late 2022 with its Arch Alchemist cards, but software problems marred the effort. The company did not give up, and the second generation Battlemage cards are very powerful.
Intel’s B580 has been called “the new $249 GPU champion” by reviewers. Tom’s Hardware. The company has significantly improved the software drivers and brought enough performance gains to make the new midrange graphics card a very attractive option for gamers on a budget. The B580 wipes the floor with AMD’s RX 7600 at the same price, and ends up beating the more expensive RX 7600 XT in the mid-range.
Intel also offers the $219 B570, which reviewers at Ars Technica call “the cheapest good graphics card.” Intel has packed enough performance into a low price to make the B570 a compelling alternative to its more expensive counterparts. PC gamers.
This is where AMD prepares to launch its new RX 9000 graphics cards. The company will probably start with high-end cards and then fill out the lineup over time, giving Intel the undisputed king of budget gaming for months. While Intel has won little market share in the past, its Battlemage graphics cards are poised to be big winners. It is said that they are being sold everywhere. Due to the demand, the price has gone up.
AMD is much more diverse today than it was a few years ago. The gaming business is still important, but the company’s PC CPU, server CPU and AI accelerator businesses are likely to drive growth even as gaming sales slow.
Still, with the launch of the RX 9000 looming, gaming could continue to drag down the company’s bottom line this year. With Nvidia dominating the high-end and Intel making up for the low-end game, AMD could see its graphics market share increase by 2025.
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Timothy Green It has places in Intel. The Motley Fool has spots on and recommends Advanced Micro Devices, Intel, Microsoft and Nvidia. The Motley Fool recommends 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 has Disclosure Policy.
