AMD warns of gaming hardware sales slowdown in 2026 as AI-induced demand spurs cost increases

AMD is warning that gamers will ease up on buying PCs and gaming hardware in the remaining quarters of 2026, thanks to external pressures. The company held its Q1 2026 earnings call on Tuesday, May 5, and stated that surging memory and component costs, triggered by “AI demand,” will inevitably squeeze out consumers and slow down shipments across the board. This includes both its desktop and laptop gaming businesses in the second half of 2026.

AMD’s first quarter of 2026 looks strong for the most part, as the company’s revenue has grown to $10.3 billion. Still, the outlook for consumer PCs and gaming hardware is where the company has softened its tone.

AMD’s Client and Gaming segment has grown 23% year over year to around $3.6 billion, driven by Ryzen CPU sales and demand for Radeon RX graphics cards.

However, AMD executives have made it clear that these good times may not last, as the outlook ahead appears challenging. CEO Dr. Lisa Su spoke on the earnings call and said:

“Looking ahead, we expect demand for our Ryzen CPUs to remain solid in the second quarter. However, we are planning for second-half PC shipments to be lower due to higher memory and component costs. Against this backdrop, we still expect our client revenue to grow year over year and outperform the market, driven by the strength of our Ryzen portfolio and expanding commercial adoption.”

She also spoke about the gaming segment and stated:

“Similar to the PC market, we believe that second-half demand in gaming will be impacted by higher memory and component costs, and we are planning the business accordingly.”

CFO Jean Hu reinforced this point, stating:

“Sequentially, gaming revenue was down 15%, consistent with our expectations. In addition, as Lisa mentioned earlier, we expect the second-half demand in gaming to be impacted by higher memory and component costs. We now expect second-half gaming revenue to decline more than 20% compared to the first half.”

AMD's recently-released Ryzen 7 9850X3D CPU is part of its bid to retain superiority in the gaming market against its resurgent chipmaking rival, Intel, which has recently begun to focus again on value for money and optimization that allows its new 'Plus' Core Ultra series CPUs to pose a significant threat to Team Red's bottom line.