While demand for GPUs aimed at training artificial-intelligence (AI) models is soaring, a very different story is playing out in the gaming GPU market. A tough economic environment is impacting consumers, and the pandemic-era boom in PC sales has given way to a bust.

Global PC shipments tumbled 30% year over year in the first quarter, according to Gartner. Sales of graphics cards were no better, despite many PC gamers holding off on upgrading during the pandemic due to low availability and sky-high prices. Unit shipments of graphics cards crashed 38.2% year over year, according to Jon Peddie Research, while the attach rate for desktop PCs tumbled 21% year over year.

This is the environment into which Nvidia (NVDA 0.26%) is launching its new mainstream RTX 4060 graphics card. The $299 product could have been a home run, inducing gamers who've stuck with older cards to upgrade. Instead, too many compromises render the RTX 4060 a middling entry in Nvidia's RTX 4000 series.

Mixed reviews

Nvidia took a step backward with the RTX 4060, including 8GB of memory and a narrow 128-bit memory interface. What this means, practically, is that the card can struggle when resolutions get too high, or in games that need more space for textures and other assets.

As reviewers at Tom's Hardware pointed out, you'd have to go back to 2015 to find a mainstream Nvidia graphics card that uses a narrow memory interface like the RTX 4060. "Viewed in that light, Nvidia has rolled back the clock eight years," said Tom's Hardware. As for the paltry 8GB of memory, Tom's Hardware had this to say: "After the RTX 3060 moved to 12GB, it's a slap in the face to go back to 8GB on the mainstream model."

The RTX 4060 does deliver meaningful performance gains over the RTX 3060, but those gains won't be large enough to induce many gamers with last-gen graphics cards to upgrade. The RTX 4060 is about 20% faster on average, although there are some games where the gap is much smaller, particularly at higher resolutions.

Gamers also need to consider how future-proof the RTX 4060 is, given that games are requiring more and more video memory with each passing year. Cyberpunk 2077, for example, recommends a minimum of 8GB of VRAM for playing with high settings at a 1080p resolution.

One thing Nvidia risks by making these compromises with the RTX 4060 is sullying its brand in the eyes of gamers. The company has a dominant market share, but the RTX 4060 is not a product that's going to engender any additional loyalty to Nvidia's brand.

Competition could sting

According to Steam's hardware and software survey, the two most widely used graphics cards are the GTX 1650 and the GTX 1060, both from Nvidia. The RTX 4060 would be a vast improvement over both, but by failing to launch a graphics card that clearly rises over the competition, Nvidia risks those gamers jumping ship to AMD or even Intel.

On the AMD side, the company's latest RX 7600 loses to the RTX 4060 on performance but is also significantly less expensive at $269. A more potent competitor is AMD's last-gen RX 6700 XT, which Tom's Hardware found beats the RTX 4060 at 1440p resolutions with ray tracing disabled. The RX 6700 XT can be found for around $300 at retail.

Intel's Arc graphics cards are also viable alternatives for those on a tighter budget. The Arc A750 sells for around $239, and while it comes up short of the RTX 4060, the lower price tag makes it a compelling option. In its suite of 9 games at a 1440p resolution, Tom's Hardware found that the RTX 4060 delivered about 21% higher average frame rates than the A750, but at a 25% higher cost.

Nvidia's gaming business is under pressure, and the RTX 4060 isn't going to help much. Gaming revenue was down 38% year over year in Nvidia's latest quarter. The demand environment for PCs and gaming graphics cards may improve as the year goes on, but Nvidia's lackluster RTX 4060 combined with meaningful competition will act as headwinds as the company tries to stage a gaming comeback.