Memory prices are draining the gaming sector - is this the end of cheap entertainment?
The computer component market currently resembles a battlefield where gamers' wallets suffer the greatest losses. The ongoing component market crisis (mainly RAM, but also rising SSD prices) has forced industry giants to brutally reassess their plans.
During the latest earnings recap, CEO AMD, Lisa Su, explicitly stated that the second half of 2026 will bring a decline in gaming revenue. Skyrocketing memory prices act like a ballast pulling down the profitability of GPU and console production.
High VRAM and RAM costs are currently reverberating across every market segment. Producers, instead of competing for gamers with lower prices, must pass on cost increases. A prime example is Sony, which in April this year decided to raise prices for all PlayStation 5 models.
This signal is a clear warning for both gamers and investors – if a giant like Sony bends under production cost pressure, smaller players will have an even harder time. This situation effectively paralyzes users' plans to upgrade PCs. Replacing a GPU or expanding RAM has become a very costly investment, directly affecting the number of transactions in AMD's quarterly results.
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PS6 and Project Helix will change the market situation?
Forecasts presented by Lisa Su and CFO Jean Hu are unequivocal – gaming revenue will drop by about 20%. The direct culprit cited is "rising memory and component costs," sounding like a verdict for those who expected quick price cuts. According to some analysts and gaming industry media, in the coming months we can expect further price corrections for consoles from all key manufacturers.
Gamers are increasingly triggering a technological survival instinct, so they hold back on purchases. This is not surprising, as another generation of gaming hardware is already looming on the horizon. The community impatiently awaits concrete information about PlayStation 6 and the mysterious Xbox Project Helix.
Moreover, industry chatter is booming about Steam Machine, supposedly filling warehouses in the United States. In light of such announcements, spending over 2500 PLN on aging architecture of the current generation (PlayStation 5 launched in 2020) seems irrational. Consumers prefer to wait for final configurations of new consoles and real device prices that will define the market for years to come.
For this reason, AMD must prepare for a stagnation period in this segment while hoping that the loyalty of "Red" fans will not wane before the launch of new chips.
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AI as a lifeline for AMD - shares soar
The decline in the gaming sector does not cause panic in AMD's board, because the giant found a far more profitable industry – artificial intelligence. Here a up to 70% revenue increase is expected. The ongoing AI gold rush has caused data center demand for computing power (and the necessary hardware) to grow avalanche-like. Although Nvidia still holds the hegemony insignia, AMD is effectively capturing an increasing share of the AI industry.
Investments in training LLMs and expanding cloud infrastructure are becoming a priority for AMD, successfully compensating for losses incurred in the gaming card market. Optimism is seen not only in AMD's board communications but also in investor reactions, as on May 7 AMD shares surged by an impressive 18.62%, reaching 421.39 USD. Note that this is the price after the session close. In pre-market trading, AMD shares on May 7 hovered around 416.59 USD.
Chart. AMD share price
Source: TradingView.
See also: Big Tech financial results. Amazon, Alphabet, Meta and Microsoft share prices start moving
Sources: CNBC.
