AMD's Gaming Revenue Falls 40% as the Console Generation Ages

If you play on a PlayStation 5, an Xbox Series X|S, a Steam Deck or Valve's new Steam Machine, there is an AMD processor doing the work. No company has more chips inside today's gaming hardware. And yet, in the third quarter of 2026, gaming became one of the smallest parts of AMD's business.

On November 4, 2026, AMD reported record total revenue of $13.4 billion, up 45% on a year earlier. Its Gaming revenue was $773 million, down 40%, about 5.8% of the company total, compared with about 13.5% a year earlier. AMD put the drop down to lower sales of semi-custom chips, the custom processors it designs for console makers, and lower graphics card sales.

Why console chips are falling

Semi-custom revenue follows the life cycle of consoles. When a new generation launches, Sony and Microsoft buy millions of chips. Six years into the PS5 and Xbox Series era, which began in November 2020, those orders naturally slow down.

This generation has another problem: price. Both console makers raised prices in 2026 as memory costs soared. The PS5 went to $649.99 in the US in April, and the Xbox Series X to $799.99 in August. Higher prices tend to mean fewer consoles sold, which means fewer chips ordered.

Data centres, again

The rest of AMD's quarter shows where the money is moving. Data Center revenue was $8.5 billion, up 97%, driven by AI and server processors, and made up almost two-thirds of the company. The Client business, which sells Ryzen processors for PCs and laptops, grew about 7% to around $2.9 billion.

AMD's forecast for the fourth quarter is about $17 billion in revenue, which would be a 66% jump on a year earlier. Like Nvidia, AMD is now mostly an AI and data centre company that also makes gaming hardware.

The next generation is already being built

The good news for AMD's gaming business is that the next wave is coming. Microsoft announced a multi-year partnership with AMD in June 2025 for its next Xbox hardware. In February 2026, AMD chief executive Lisa Su said development of Microsoft's next-gen Xbox, with an AMD semi-custom chip, was "progressing well to support a launch in 2027."

AMD is also working with Sony. In 2025 the two companies described a joint research effort, which they called Project Amethyst, focused on machine learning for graphics, including upscaling of the kind used in PS5 Pro.

Handheld PCs help too. AMD supplies the Ryzen Z2 chips in the ROG Xbox Ally handhelds launched in October 2025 and in Lenovo's Legion Go 2, as well as the Steam Deck.

Why it matters

AMD's falling gaming revenue is not a sign that people have stopped playing. It is a sign that this console generation is in its late years, made worse by price rises that have slowed hardware sales. The next jump will come when new consoles arrive, starting with an Xbox that AMD expects in 2027.

WGC's take: the real question for 2027 is memory. A new Xbox or PlayStation needs a lot of it, and memory makers say supply will stay tight into 2027 and beyond. AMD can design the chips, but the price of the box around them depends on a market neither AMD nor the console makers control. For that wider story, see our long read on the RAM crisis.