Danny Weber
AMD's Q1 2026 results show record data center revenue amid AI boom, but warns of component cost hikes damping gaming demand, with gaming revenue expected to fall over 20% in H2.
AMD reported its first-quarter 2026 results and issued a worrying forecast. Despite record revenue in its data center segment, the company warned of serious challenges in consumer and gaming markets during the second half of the year.
CEO Lisa Su acknowledged that the company is factoring in negative trends and planning accordingly. The main issue: rapidly rising memory and component costs are starting to dampen demand.
Executive vice president and CFO Jean Hu said the company expects component and memory cost increases to impact gaming demand in the second half. He noted that gaming revenue in that period is now expected to fall more than 20% compared to the first half.
This applies specifically to the gaming segment—graphics cards and consoles—not the entire business. AMD hopes to partially offset the decline with corporate sales and demand for Ryzen-powered laptops.
The situation is particularly sensitive given rising console prices. Microsoft has already increased the cost of the Xbox Series, and Sony has raised prices on the PlayStation 5, even for refurbished models. That could either explain weakening demand or signal further market price hikes.
In contrast, the AI segment tells a different story: AMD expects server processor revenue to surge 70% in the second quarter, driven by booming demand. The company is increasingly leaning on AI, while the gaming market struggles with rising costs and component shortages.
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