AMD predicts 20%+ gaming decline due to higher costs
AMD predicts major gaming decline due to “higher memory and component costs”
During the company’s Q1 2026 earnings call, AMD predicted that its “gaming” revenue would decline substantially during the second half of this year. Why? Rampant AI datacenter demand has substantially raised memory prices and component costs. This has made AMD’s gaming products more expensive to manufacture. Furthermore, it has substantially raised the cost of new PCs and gaming systems. This has forced many gamers to forgo hardware upgrades.
Similar to the PC market, we believe that second-half demand in gaming will be impacted by higher memory and component costs, and we are planning the business accordingly.
– AMD CEO Lisa Su
Overall, AMD expects its gaming revenues to decline by “more than 20%” in the second half of this year. AMD’s gaming segment is primarily Radeon GPUs and gaming consoles. AMD’s revenue decline will be due to lower console and GPU sales.
The gaming business revenue was $720 million, up 11% year-over-year, primarily driven by higher demand for Radeon GPUs, partially offset by lower semi-customer revenue. Sequentially, gaming revenue was down 15%, consistent with our expectations. In addition, as Lisa mentioned earlier, we expect second half demand in gaming to be impacted by higher memory and component costs. We now expect second half gaming revenue to decline more than 20% compared to the first half.
– AMD Executive Vice President, CFO, and Treasurer, Jean Hu
While things don’t look good for AMD’s gaming business, other areas of AMD are strong. AMD has predicted a 70% increase in year-over-year datacenter CPU sales in Q2 2026. For Q1 2026, AMD has reported $10.3 billion in revenue and a gross margin of 53%. Q1 revenue is up 38% year-over-year, and gross margin is up by 3 percentage points.
Overall, AMD’s “Gaming” revenue was $720 million for Q1 2026. This is small compared to AMD’s client and datacenter revenues. As such, AMD’s expected decline in gaming revenue has not affected its future growth projections. AMD’s gaming decline will be covered by growth in other areas.
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