NVIDIA (NVDA -0.04%) launches new graphics cards. Later, sometimes much later, Advanced Micro Devices (AMD 0.83%) responds with new cards of its own but only manages to catch up in terms of performance. That's been the pattern in the graphics card industry in recent years.

That pattern has now been broken with the launch of AMD's first Navi-based graphics cards, the RX 5700 and RX 5700 XT. After an unusual period of pre-launch drama, which included a product refresh from NVIDIA and a last-minute price cut from AMD, the cards debut at the same price points as the NVIDIA cards they compete against. AMD's cards handily win on performance, according to Tom's Hardware, marking the first time in a long time that NVIDIA has felt genuine competitive pressure from its rival.

AMD's Radeon RX 5700 graphics card.

AMD's Radeon RX 5700 graphics card. Image source: AMD.https://www.amd.com/system/files/2019-06/237107-rx5700-gpu-gallery2-1260x709.png

Navi looks goods

AMD's RX 5700 has an MSRP of $349 following a $30 price cut. The faster RX 5700 XT goes for $399 following a $50 price cut. These cards go head-to-head with NVIDIA's $349 RTX 2060 and $399 RTX 2060 SUPER.

Tom's Hardware found that the RX 5700 produced 11% higher frame rates, averaged across its benchmark suite, than the RTX 2060. Had AMD kept its original pricing, the comparison would have been muddled by a higher price. But with both cards now priced the same, AMD's entry clearly comes out on top.

The RX 5700 XT also bests its competition, beating the RTX 2060 SUPER by 9.9% on average. It even comes close to the performance of NVIDIA's $499 RTX 2070 SUPER, which beats AMD's card by just 6.9% despite costing 25% more.

There is one unexpected side effect of this launch: AMD's highest-end graphics card, the Radeon VII, has been rendered largely irrelevant. Launched earlier this year and based on an older architecture, the $699 Radeon VII wasn't a particularly good product to begin with. It's now an even worse deal, beating the RX 5700 XT by just 3.8% on performance while costing a whopping 70% more.

On top of beating NVIDIA on raw performance, AMD made huge gains in power efficiency. The company's new cards aren't quite as power efficient as NVIDIA's products, but the gap has been substantially narrowed. Power efficiency has been one of AMD's big weaknesses for years, but a new architecture coupled with the move to a 7nm manufacturing process has allowed the company to nearly catch up with NVIDIA.

Not quite perfect

There are a few downsides to AMD's new cards that may have a negative effect on sales. For one, the RX 5700 XT produces a tremendous amount of heat -- Tom's Hardware listed "uncomfortably hot operating temperatures" as one of the negatives. High temperatures appear to be one of the trade-offs AMD had to make to compete on performance.

AMD's new cards also lack hardware dedicated to accelerating ray tracing. A big selling point of NVIDIA's RTX 20 series, and a justification for the company's lofty pricing, was built-in hardware that made ray-traced graphics possible. AMD's cards beat NVIDIA on performance in standard games, but they are decidedly less future proof that the RTX 20 series.

NVIDIA shot itself in the foot

AMD is competitive again in the graphics card market because NVIDIA pushed its prices too high. Even after a de facto price cut via its SUPER product refresh, AMD was able to match NVIDIA on price while beating it on performance.

Even before this AMD launch, NVIDIA's pricing power was clearly hitting a ceiling. The company admitted earlier this year that "sales of certain high-end GPUs using our new Turing architecture, including the GeForce RTX 2080 and 2070, were lower than we expected for the launch of a new architecture." Those weak sales were in the absence of any real competition.

As it stands today, AMD has the advantage at the $349 and $399 price points. Another price cut from NVIDIA could turn the tables, but that would require the company to sacrifice margins for market share.

One thing is clear: AMD is done playing catch-up.