Key findings
- Nvidia has little reason to rush the RTX 5000 to market or focus on producing great GeForce GPUs instead of AI chips.
- AMD also generates 90% of its revenue from data center chips and has no problem postponing the release of the RX 8000 to 2025.
- Shareholders are dictating the shift from gaming GPUs to AI chips, thereby limiting gamers' influence in the market.
That AI is the dominant technology trend across industries and geographies is hardly news by now. Companies like Nvidia have been at the epicenter of the AI wave and have naturally benefited the most by supplying data center GPUs to Big Tech and others. More recently, Nvidia's biggest competitor in the GPU space, AMD, has been following the same trajectory as Team Green.
Riding the AI wave has brought a lot of benefits for Nvidia and AMD, but it has been far from ideal for gamers around the world. It seems the end is near – especially given recent developments – as both Nvidia and AMD have put gaming GPUs on hold. There seems to be no end in sight to this “AI era” of GPU manufacturers, and as gamers, we can only watch from the sidelines.
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Nvidia has no plans to focus on gaming GPUs again
Always follow the money
When Nvidia announced its first-quarter financial results earlier this year, it was clear that revenue from its data center business made up the largest portion of its top line. Compared to the paltry $2.6 billion brought in by gaming, revenue thanks to AI was a whopping $22.6 billion. When the company announces second-quarter results later this month, I expect the share of AI revenue to increase even further.
With all resources and silicon allocation focused on the annual release of AI chips, there may not be much room left to make halfway decent GeForce GPUs.
While it was clear that Nvidia had put gaming GPUs on the back burner, the company's decision to release new AI GPU architectures every year spelled doom for gaming GPUs. With all resources and chips focused on the annual release of AI chips, there may not be much room left to produce halfway decent GeForce GPUs.
And with recent rumors that Nvidia may not launch its RTX 5000 gaming GPUs until next year, this seems to be the final nail in the coffin. Originally expected to release in late 2024, the delay appears to be due in part to Nvidia prioritizing Blackwell AI chips, indicating the company's increasingly cool attitude toward gaming products.
With no competition in the high-end space and little reason to allocate more resources to gaming GPUs than to AI chips, Nvidia seems quite confident that it can continue its AI-focused strategy.
Moreover, Nvidia is certainly in no hurry to cross the finish line first with its RTX 5000 GPUs, considering AMD is rumored not to make any gains in the high-end GPU segment this year. With no competition in the high-end segment and little reason to allocate resources to gaming GPUs rather than AI chips, Nvidia seems pretty confident about continuing its AI-focused strategy.
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The increasing demand for AI chips made it inevitable
To no one's surprise, AMD's second-quarter financial results showed a nearly 50% revenue share for the data center segment of $2.8 billion (up 155% year over year), while gaming brought in just 11% of $648 million, down 59% year over year. The gaming revenue percentage is eerily similar to Nvidia's, as AMD benefits from rapidly growing demand for AI chips.
It now seems that AMD, just like Nvidia, is not too concerned about the gaming space as content is where the big money is coming in thanks to the data center segment.
Aside from not competing in the high-end gaming GPU segment, recent rumors suggest that the launch of the RX 8000 series will also be delayed to 2025. CES seems to be the most likely window for the launch of the next generation of gaming GPUs from both Team Green and Team Red. Previous reports suggested that AMD could outsmart Nvidia by accelerating the launch and taking advantage of the wide-open “late 2024” window.
However, it now seems that AMD, just like Nvidia, is not too concerned about the gaming space and that content is bringing in the big money thanks to the data center segment.
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Shareholders, not players, have all the power
Vote with your wallet? There is no choice
A popular saying in the PC hardware community is “vote with your wallet.” That may have worked in the past, but rest assured it won't cut it now. Both Nvidia and AMD have announced their intention to focus their energies on data center GPUs while gaming GPUs take a back seat. Nvidia will sell its high-end RTX 5000 cards at arbitrary prices because it knows people will buy them no matter what.
Poor GPU launches seem to be the rule rather than the exception, and I'm convinced this will continue into the next generation.
AMD could try to conquer the mid-range segment by undercutting Nvidia, but I don't expect crazy improvements from generation to generation. Bad GPU launches seem to be the rule rather than the exception, and I believe that will continue into the next generation. If shareholders have to be satisfied by keeping the AI billions flowing, gamers have little say left.
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It is the end of an era and the beginning of a new
No one can (or should) blame companies for chasing their most profitable business areas, but when this comes at the expense of other segments, alarm bells start ringing. Recent developments seem to indicate a general shift in focus from gaming GPUs to AI chips. This could exacerbate the prevailing problems in the market – poor value for money, lack of reasonable budget options, and lack of innovation.
It is impossible to predict how long this trend will last, but gamers will probably not be the focus segment for Nvidia and AMD, at least for the next few years.