AMD's gaming revenue plunges 48% and might not recover until 2025

[Shawn Knight]

In a nutshell: Time flies when you're building some of the fastest silicon in the world. On Monday, Advanced Micro Devices celebrated its 55th anniversary as a chipmaker but its latest earnings report could dump a bit of rain on the parade.

AMD opened its doors on May 1, 1969, and was led by co-founder Jerry Sanders. AMD jumped into the microprocessor industry in the mid-70s and competed directly with Intel and other chipmakers of the day. It wasn't until the early 2000s, however, that AMD started making significant headway in its battle with Intel thanks to its Athlon processors.

Things took a turn for the worse in the latter half of the 2000s and the early 2010 but by the end of the decade, AMD again found its footing – this time with its successful Ryzen family of CPUs.

Our own Nick Evanson and Graham Singer co-authored an excellent feature on the rise, fall, and revival of AMD that I highly encourage checking out.

While AMD's processor business has done very well for itself in recent years, it's been more of a struggle for the graphics division. This week as part of its first quarter report, AMD said its gaming segment generated $922 million in revenue. That's down a whopping 48 percent year over year (from $1.757 billion in Q1 2023) and 33 percent sequentially (from $1.368 billion in Q4 2023), with AMD blaming slower Radeon GPU sales and a decrease in semi-custom revenue.

Operating income for the gaming division was $151 million, down from $461 million last quarter and $798 million in Q1 23.

On the brighter side, AMD has lots of interesting things cooking on the CPU side – specifically with its Ryzen "Strix Point" mobile processors due out later this year. AMD CEO Lisa Su said the Strix products are really well suited for premium AI PC products, and believes this is where we will see some of the strongest AI PC content originate in the beginning. As we move into 2025, Su said, we'll start to see AI penetrate the rest of the portfolio.

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AMD's gaming revenue plunges 48% and might not recover until 2025

 

[Dimitriid]

While it's probably still extremely hard to swallow, as I understand AMD this was an expected outcome: their gaming division probably profits almost exclusively from the console chips and that's both the most volume but also the most margins for AMD when a console launches which was a while ago: sure Sony (And maybe even Microsoft) still move a lot of units but I believe as time goes on their deal with them means they have to produce and give em those chips almost at cost and certainly not for the initial margins.

So their gaming division can potentially bonce back once Sony decides to launch a PS6...Which might be a while. And for those thinking no: the PC gaming market has never been important for AMD as compared to their other businesses and it shows as they're just not a big enough company to overtake Nvidia while still battling also intel on the CPU side.

 

[themastergoose]

In before the "death of Radeon" comments start. You guys are too predictable, prove me wrong. ;-)

 

[Watzupken]

I agree that AMD’s GPU department probably gets the least love from AMD. However, that is not because they want to, but because they have budget constraints and not possible to fight 2 wars with competitors quite a lot bigger or established as them. Given they now have a stable footing in the CPU space, it makes sense to focus more on it, rather than splitting their focus and fall behind.

 

[emmzo]

Well, they didn`t exactly compete with Nvidia, they kept their prices almost just as high for similar offerings with very small incentives. Shaving 50 bucks when your RT and FSR are inferior is not much of a deal. And now with the mining and the scalping phase thankfully over, the overall sales dropped abruptly. I`m sure Nvidia isn`t doing very good either, but they get to rely on their AI business. Following the news they`re not going to compete in hi tier, it`s a sad day indeed for the consumer. People were happy that they`re going to get cheaper mid range cards. Just you wait. No competition hi tier goes all the way down and prices are going to increase. Intel is at least five years away from something decent, just my two cents, so, it sucks big time.

 

[emmzo]

I agree that AMD’s GPU department probably gets the least love from AMD. However, that is not because they want to, but because they have budget constraints and not possible to fight 2 wars with competitors quite a lot bigger or established as them. Given they now have a stable footing in the CPU space, it makes sense to focus more on it, rather than splitting their focus and fall behind.

They all have budget constrains, no one has unlimited money to throw away and AMD isn`t all that poor either. Last I checked they had a 233 billion market cap vs Intel 129 billion. So, technically they`re richer than Intel and while Intel is investing in GPUs, AMD has quit. It`s all about management and poor decisions.

 

[Starfals]

I cant wait for a 1000 bucks 5060. No you say? 4070 ALREADY costs 750-800 for some models. Tax and all. Imagine Nivida having 0 competition now... yeah. Fun times are ahead. Might not happen for 5060, I admit its too soon, but 6060? If they keep pricing stuff higher and higher, thats the end goal. 4060ti here is 650 bucks here. I know my country is not the whole world but still. Anyways, this news is just horrible

 

[redgarl]

Let's forget about datacenter...

 

[redgarl]

I agree that AMD’s GPU department probably gets the least love from AMD. However, that is not because they want to, but because they have budget constraints and not possible to fight 2 wars with competitors quite a lot bigger or established as them. Given they now have a stable footing in the CPU space, it makes sense to focus more on it, rather than splitting their focus and fall behind.

That's absolutely false. You are only referring to gaming dGPU. In reality, the money is in the datacenter and AMD decided to maximize their margins by moving their CoWoS allocation for MI300, which is the right decision.

They are a major GPU maker, but not for client... but for enterprise.

 

[Abaidor]

I cant wait for a 1000 bucks 5060. No you say? 4070 ALREADY costs 750-800 for some models. Tax and all. Imagine Nivida having 0 competition now... yeah. Fun times are ahead. Might not happen for 5060, I admit its too soon, but 6060? If they keep pricing stuff higher and higher, thats the end goal. 4060ti here is 650 bucks here. I know my country is not the whole world but still. Anyways, this news is just horrible

Nvidia has competition.......themselves. Increasing prices will simple price out more consumers.If that does not matter for their bottom line because they can or want make a better use of finite resources this is another matter. But if the want to sell there is a thing called price elasticity of demand and they know about it........

They could as well get rid of the "gamers" as a sector in the future if it becomes small vs their other revenue streams. Or price accordingly to alter the relation price/demand...

What if you are only left with Intel adn AMD as an otpion.........well you can go with them right now as a matter of fact.

....it's all about strategic direction & finance...

 

[poohbear]

Do 2 things at 50%, or 1 thing at 100%. GPUs are the future as Nvidia has so ridiculously proven w/ their data centres and AI.

AMD needs to stop making CPUs (especially w/ Qualcomm's ARM CPUs on the horizon) and switch to making exclusively GPUs.

 

[poohbear]

Nvidia has competition.......themselves. Increasing prices will simple price out more consumers.If that does not matter for their bottom line because they can or want make a better use of finite resources this is another matter. But if the want to sell there is a thing called price elasticity of demand and they know about it........

They could as well get rid of the "gamers" as a sector in the future if it becomes small vs their other revenue streams. Or price accordingly to alter the relation price/demand...

What if you are only left with Intel adn AMD as an otpion.........well you can go with them right now as a matter of fact.

....it's all about strategic direction & finance...

lol what do you mean if it(gaming) becomes small? In the last quarter, they reported $2 billion in gaming revenue and $16 billion in data centres & AI revenue. It's already super small.

 

[dangh]

Time to buy dip

 

[Beerfloat]

That's absolutely false. You are only referring to gaming dGPU. In reality, the money is in the datacenter and AMD decided to maximize their margins by moving their CoWoS allocation for MI300, which is the right decision.

They are a major GPU maker, but not for client... but for enterprise.

AMD’s data center revenue is up 80%, which sounds like a lot. Until you hear about Nvidia’s being up 380%.

Radeon isn’t the only area where AMD is sliding.

 

[Kam7r]

I see the brainswash of the normal consumer is working, the advertisement of the cr@pload of paid youtubers is too...

 

[Rudyduu]

Do 2 things at 50%, or 1 thing at 100%. GPUs are the future as Nvidia has so ridiculously proven w/ their data centres and AI.

AMD needs to stop making CPUs (especially w/ Qualcomm's ARM CPUs on the horizon) and switch to making exclusively GPUs.

There is no way to know for certain if Qualcomm's ARM CPU's are going to really change the CPU landscape. They are touting massive increases in performance, but until there are third party benchmarks and tests it's all fiction.

 

[Rudyduu]

I see the brainswash of the normal consumer is working, the advertisement of the cr@pload of paid youtubers is too...

Could you be any more vague? What's your post supposed to mean? Is it just another "I'm going to post something negative...for reasons" post or what? Youtubers who are paid haven't sold their souls to whoever is paying them anymore than anyone else paid by any company.

 

[wiyosaya]

Let's forget about datacenter...

While that might seem like it would be a good thing for Gamers, its AMD's bread and butter ATM, and highly unlikely to happen.

I highly doubt AMD is sleeping. Its more likely that AMD is working on improving their appeal in the gamer market. They will get there, its just a matter of when, IMO.