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It looks like consumers are holding off buying gaming consoles and graphics cards, according to AMD, which reports that demand for gaming has plummeted.
The company's Q1 earnings show that AMD's revenue for gaming reached only $922 million, falling 48% year-over-year during the January to March period.
The decrease is significant since AMD not only produces PC graphics cards but also the chips for Sony’s PlayStation 5, Microsoft’s Xbox Series X, and Valve’s Steam Deck gaming handheld.
In addition, AMD says gaming revenue for Q1 fell sequentially from Q4 by 33%. More pain is expected in Q2 and the coming financial quarters. "If you look at the gaming, the demand has been quite weak. That's quite very well known, and also their inventory level,” CFO Jean Hu said during an earnings call.
“We actually think the second half will be lower than first half,” she added. “That's basically how we're looking at this year for the gaming business.”
Hu made the comment after Sony reduced projections for PS5 sales, saying “we anticipate a gradual decline in unit sales from next fiscal year onwards.” Meanwhile, Microsoft reported last week that Xbox hardware revenue had dropped 31% year-over-year “driven by lower volume of consoles sold.”
AMD’s earnings are stirring up speculation that consumers may be fed up with high prices for today’s console hardware, graphics cards, and games; the latter can now start at $70. Still, a refresh of new GPUs and consoles in the coming quarters, including the rumored PS5 Pro, could spark new sales down the line.
In contrast, AMD rival Nvidia saw its gaming revenue remain flat quarter-over-quarter to reach $2.9 billion, which suggests some consumers are still buying GPUs, despite the high pricing.