AMD Faces Challenges as Gaming Revenue Expected to Dip Over 20%
AMD has recently revealed its financial performance for the first quarter of 2026, boasting an impressive revenue of $10.3 billion. While this figure shows minimal quarter-on-quarter growth, it still marks a remarkable 38% increase compared to the same time last year. A big chunk of AMD’s success can be attributed to the booming demand for high-performance CPUs and accelerators driven by the AI sector. However, even this tech giant isn’t immune to the challenges posed by the ongoing memory supply crisis.
Breaking down that hefty $10.3 billion total, AMD’s data center segment raked in $5.8 billion, reflecting a staggering 57% growth from Q1 2025. On the other hand, the gaming division pulled in around $720 million, which, while it sounds impressive, represents a mere 11% growth year-over-year. AMD is cautioning investors about a potential downturn in this sector soon.
During a recent earnings call, Jean Hu, AMD’s executive VP and CFO, stated, “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.” This essentially means that due to skyrocketing prices for memory and other essential components like CPUs, gamers might end up tightening their belts.
CEO Lisa Su also chimed in, noting that progress in the commercial PC market with AI PCs has been strong, but the consumer-focused desktop segment is feeling the pinch from rising memory prices. As AMD’s tech also powers the PS5, she mentioned, “Semi-custom revenue declined year-over-year as expected at this stage of the console cycle.” With the PS5 launching back in 2020, it’s natural for this phase of its lifespan to show some decline.
While some gamers might be looking ahead to the next console generation, Su assured, “Engagements with customers on next-generation platforms remain strong.” However, given the current landscape, AMD’s gaming revenue predictions aren’t too surprising. Su elaborated that the entire industry is grappling with tighter supply chains and rising costs, particularly around memory components, which is impacting consumer markets.
AMD isn’t alone in facing these challenges; both Nvidia and Microsoft have also acknowledged similar forecasts regarding how the memory crisis will affect their revenues. “The way we’re seeing it unfold in the market is primarily on the Data Center side, driven by AI compute demand,” Su explained. “However, we’re also keeping a close watch on how these memory price increases could impact the PC and gaming sectors in the latter half of the year.”