AMD is signaling that the strong momentum seen in PC gaming and gaming hardware at the start of the year may not last through the rest of 2026. The company now expects pressure from rising memory and component costs, driven by surging AI demand, to weigh on shipments and consumer buying patterns later in the year.
That caution came during AMD’s first-quarter 2026 earnings call on Tuesday, May 5. Even after posting $10.3 billion in revenue for the quarter, the company sounded more guarded about the outlook for consumer PCs and gaming devices than it did at the start of the year.
Higher costs are starting to shape demand
AMD said Ryzen CPU demand remains solid in the second quarter, but the company is already preparing for weaker PC shipments in the second half. Dr. Lisa Su said memory and other component prices are climbing, and that trend will make the market more difficult for desktop and laptop buyers alike.
The company still expects client revenue to grow year over year and outperform the wider market. Ryzen’s strength and broader adoption in commercial PCs continue to support that view, but AMD is also adjusting its plans to reflect a more conservative operating environment.
That shift matters because the cost pressure is not limited to mainstream computers. AMD said the same conditions are expected to affect gaming demand in the second half as well, especially when higher production costs meet more cautious consumer spending.
Gaming revenue is already cooling
Chief Financial Officer Jean Hu gave a clearer signal about the gaming business. She said gaming revenue fell 15% sequentially, which matched the company’s expectations.
Hu also said AMD now expects second-half gaming revenue to drop by more than 20% compared with the first half. That outlook suggests a sharper slowdown after a period in which sales were still supported by strong demand.
The message is straightforward: as component prices rise, buyers may delay upgrades or cut back on gaming purchases. For AMD, that could translate into slower shipments across both gaming desktops and gaming notebooks.
Ryzen and Radeon still support the business
Even with the softer outlook, AMD’s Ryzen processors and Radeon RX graphics cards remain important drivers. In the first quarter of 2026, the Client and Gaming segment grew 23% year over year to about $3.6 billion, helped by those product lines.
That growth helped lift AMD’s overall quarterly revenue to $10.3 billion. The numbers show that demand has not disappeared, but they also highlight how dependent the company’s consumer business has become on a market that is now facing rising cost pressure.
AMD continues to view its client business as a relative strength, especially with commercial adoption expanding. Still, the company’s own guidance suggests that this advantage may not fully offset the drag from higher memory and component costs later in the year.
Competition remains intense
AMD is also trying to defend its position with new products. Ryzen 7 9850X3D is part of that effort, as the company works to stay competitive in a market that is becoming harder to read.
Intel is pushing back as well, with a renewed focus on value and efficiency. AMD said Intel’s Core Ultra “Plus” series is being positioned to create a meaningful challenge, which adds another layer of pressure to an already cautious gaming outlook.
For now, AMD still has momentum in Ryzen and Radeon. But with AI demand driving up costs across the supply chain, the company is bracing for a second half of 2026 in which gaming hardware sales may slow and consumer behavior becomes more selective.