The graphics card market is dominated by Nvidia (NVDA 1.56%). The gaming and AI powerhouse has a 90% unit market share, according to Jon Peddie Research, with Advanced Micro Devices (AMD 2.33%) in a distant second place. While Nvidia's market share fluctuates, the company has held an enormous lead over AMD for years.
Over the past few years, Nvidia's data center business has exploded as demand for AI accelerators boomed. In the fourth quarter of Nvidia's fiscal 2025, data center revenue was nearly 14 times larger than gaming revenue, and gaming revenue hit its lowest level in more than a year. Nvidia relies on TSMC for manufacturing, and it's prioritizing its pricey artificial intelligence (AI) accelerators over its gaming graphics cards.
The launch of Nvidia's RX 50 series graphics cards earlier this year put the company's priorities on display. Supply was far below demand, leading to availability issues and retail pricing far above manufacturer's suggested retail price (MSRP). There were also a variety of issues, including quality control shortfalls that led to some graphics cards shipping with defective hardware and software driver bugs.
AMD is also focusing on AI accelerators, but the company's forecast for AI sales this year fell short of expectations. With Nvidia seemingly checked out of the gaming graphics processing unit (GPU) market as AI chip sales soar, AMD has an opportunity to win over gamers with its RX 9000 series graphics cards.
NASDAQ: AMD
Key Data Points
Playing catch-up
AMD will launch its RX 9070 and RX 9070 XT graphics cards later this week, priced at $549 and $599, respectively. If AMD can manage to muster enough supply and keep retail prices close to MSRP, these cards should be a hit.
While third-party reviews aren't yet available as of this writing, AMD is promising up to 40% higher gaming performance compared to its last-generation graphics cards. The company will ship both models with 16 GB of graphics memory, while Nvidia's RTX 5070 comes with just 12 GB. The RTX 5070 launches this week as well, at an MSRP of $549, but snagging one at that price may be impossible depending on demand.
Ray tracing and AI-powered features are two reasons why gamers have flocked to Nvidia's graphics cards, and in both areas, AMD is claiming to have made some serious progress. AMD is promising more than double the ray tracing throughput per compute unit for its new graphics cards, which should help close the ray tracing gap with Nvidia. Ray tracing has long been an Achilles' heel for AMD's graphics cards, but the company appears to finally be taking the technology seriously
AMD also touted a new version of its FidelityFX Super Resolution feature, which uses machine learning to upscale images while reducing visual artifacts. Combined with frame generation and anti-lag features, AMD is pushing ahead in an area where Nvidia has historically been in the lead. A new generation of AI accelerators built into the RX 9000 series graphics cards enable these new features.
Later this year, AMD plans to extend the RX 9000 series lineup with RX 9060 products that target lower price points. While Nvidia has been untouchable at the high-end of the market, AMD has generally been far more competitive in the mid-range.
AMD's time to shine
If there was ever a time for AMD to claw back market share from Nvidia, it's right now. With the AI boom still in full force, consuming Nvidia's manufacturing allocation at TSMC and forcing the company to treat gaming GPUs as second-class citizens, AMD has an opportunity to swoop in and provide gamers with an alternative.
While Nvidia's ultrahigh-end graphics cards get a lot of attention, most of the volume in the graphics card market occurs at lower price points. The most used graphics cards, according to Steam's hardware and software survey, are mid-range cards: Nvidia's RTX 4060, RTX 3060, and RTX 4060 TI. Even the GTX 1060, which is nearly 9 years old, is still in wider use on Steam than any AMD graphics card. If AMD can provide an upgrade path, along with enough supply to keep a lid on retail prices, the RX 9000 series could be its biggest seller in years.
