AMD’s gaming revenue plummeted by a staggering 48% in the first quarter of 2024, raising concerns about the health of the company’s graphics card business and its custom processors for gaming consoles. This dramatic drop in revenue is attributed to a combination of declining sales of the Radeon RX 7000-series GPUs and a decrease in demand for processors for game consoles, leading to a dim outlook for the rest of the year. The company’s gaming segment saw earnings fall from $1.757 billion in the same quarter of 2023 to $922 million this quarter, indicating a severe slowdown in AMD’s gaming operations.
The downward trajectory in AMD’s gaming business comes amid weak sales of the Radeon RX 7000-series GPUs and a marked decrease in demand for its custom processors used in consoles like Microsoft’s Xbox Series X|S and Sony’s PlayStation 5. AMD’s CFO, Jean Hu, explained during an earnings call that the company anticipated a decline in console sales, given the current stage in the console life cycle. However, the reduction in revenue from discrete GPUs was more alarming, hinting at deeper issues in AMD’s graphics division.
AMD’s projections suggest that the gaming revenue may continue to decline throughout the rest of 2024, with no significant recovery expected until 2025. The company is bracing for a decline of over 30% in the first half of 2024 and even lower results in the second half, pointing to an uncertain and challenging year ahead for AMD’s gaming division. This could mean delays or limited releases of upcoming products like the rumored Radeon RX 8000-series GPUs, with AMD potentially shifting its focus away from high-end GPUs to more budget-friendly solutions.
AMD’s weaker-than-expected performance in the gaming market has broader implications for the graphics card industry. The possibility of AMD not launching new high-end GPUs in 2024 could leave Nvidia with a stronger foothold in this space. Additionally, fewer sales of console processors might signal a slow down in the overall gaming hardware market, indicating a possible shift in consumer interest or a plateauing in console sales. AMD’s next moves will be closely watched by the industry, as its recovery plan will be crucial for regaining lost ground in 2025.
For further details, you can read the full analysis on Tom’s Hardware here.