Nvidia faces backlash from gamers who feel abandoned for AI

For its first 30 years, NVIDIA It wasn’t a household name unless you were a gamer. Now, some of its original fans have been left behind as artificial intelligence has made the chip maker the world’s most valuable company.

Stacey Rusgon of Bernstein Research said, “The gaming segment is no longer the driving force of the company. There was a point when it clearly was.”

Nvidia popularized the graphics processing unit, or GPU, which enables faster frame rates and rendering that make playing the best video games possible.

When Nvidia released its first GPU, the GeForce 256, in 1999, it laid off most of its employees and came close to bankruptcy in doing so. Gamers embraced the new type of processor, bringing Nvidia back from the brink.

Now, as demand for AI grows, almost all of Nvidia’s revenue comes from gaming rather than its products that serve that industry. And as AI chipmaking reduces the available memory supply, Nvidia has been forced to make tough decisions about priorities.

In a memory-constrained reality, it’s not shocking that Nvidia would prioritize its far more profitable data center GPUs like Hopper and Blackwell.

Nvidia’s operating margin in its compute and networking segment averaged 69% over the past three years, compared to a 40% margin for its consumer-forward graphics segment.

“I understand they’re going to go after him. And it breaks my heart,” said Greg Miller, co-founder and host of the popular video game podcast. little weird games every day In an interview with CNBC.

Miller said, “Dance with what brought you here. Gamers brought you here.”

If analyst predictions are correct, 2026 will be the first year in three decades that Nvidia will not release a new generation of its consumer-facing GeForce graphics processing units.

Gamers are “extremely important” to Nvidia, according to an email the company sent to CNBC, adding that it is “always innovating, testing, and releasing” new gaming-focused technologies.

The current RTX 50 series of GeForce GPUs was unveiled at CES in January 2025.

But with 2026 CES and GTC in the rearview mirror, some are worried this will be the first year without a new generation, although Nvidia usually reveals new hardware by the end of September.

While this represents a big strategy pivot, some gamers say it’s not a bad move for their budget.

Miller’s co-founder of Kinda Funny Games, Tim Gatiss, said, “It’s hard to keep up. You can’t upgrade every year, so taking a little break and waiting a generation really makes sense, I think it’s really in service to gamers.”

Nvidia’s current era of AI dominance began two decades ago in 2006 with the launch of its CUDA software toolkit. Suddenly, developers could use GPUs for general-purpose computing instead of just graphics.

Then, in 2012, Nvidia’s deep learning capabilities were unveiled, in what many consider the big bang moment for modern AI. Nvidia’s GPUs and CUDA were used to create a neural engine called AlexNet that blew away the competition during a major image recognition competition.

Although Nvidia didn’t stop making gaming GPUs, it signaled a new focus on GPUs for AI in 2020 when it Bought high-performance computing chip maker Mellanox Technologies for $7 billion.

In contrast, Nvidia sells its RTX 50-series gaming GPUs mid-range $299 Up to $1,999.

During the cryptocurrency peaks of 2018 and 2021, Nvidia’s GPUs sold for up to three times the listing price in online marketplaces as they were once crucial for Bitcoin and Ethereum mining.

Although prices dropped when mining changed direction in 2022, Nvidia’s current RTX 5090 GPU is still sold online for up to double the retail price.

The bumper demand for last year’s generation may leave Nvidia less motivated to introduce a new version this year.

Industry reports There is suggestion that Nvidia plans to reduce the production of its latest gaming GPUs by 40% as it faces a major shortage of the general-purpose memory needed to manufacture GPUs.

Dynamic random access memory, or DRAM, enables fast, temporary data storage so that the GPU can run tasks in parallel.

Personal computers, where Nvidia’s gaming GPUs end up, have suffered the brunt of the DRAM shortage. When memory prices rise, GPUs cost more to manufacture, and that cost is passed down to consumers.

Gartner Prediction PC prices will rise 17% this year, leading to a 10.4% decline in PC shipments.

“Given how expensive this has all become, it’s worrying that prices on the gaming side are rising with no sign of ever coming down, and then Nvidia is clearly going after a completely different category of consumers,” Gettys said.

If the entry-level consumer PC market disappears by 2028 as Gartner predicts, the market for Nvidia’s entry-level gaming GPUs is likely to shrink as well.

Instead, Nvidia is likely saving limited memory inventory for its higher cost, higher margin AI chips.

“If there’s a push-out or delay on the gaming roadmap, it’s probably in large part because they probably can’t make the cards anyway because the memory is hard to get,” Rasgon said. “I think every bit of memory out there is really being prioritized in AI computation.”

High-performance GPUs like Blackwell and Rubin are lined with dense stacks of a specific type of DRAM known as High Bandwidth Memory, or HBM. Rasgon said it takes about four times as many silicon wafers to make one gigabyte of HBM as it does to make the same amount of more traditional types of DRAM.

“That mobility is starving the overall industry of the type of memory that is traditionally used for more consumer type applications. It’s just not available,” Rasgon said.

Nvidia told CNBC that it is continuing to ship all GeForce GPUs because it is seeing strong demand, and is working closely with suppliers to maximize memory availability.

Gettys said, “If they’re making three times the money and shareholders are three times happier, then yes, I think they’ll leave gaming, even if it’s what got them there.”

‘Feels like a slap in the face’

CEO Jensen Huang made a big gaming announcement at the beginning of his keynote speech at Nvidia’s annual GTC conference in March, but the gaming community wasn’t excited.

Huang announced the next generation of its rendering software, called Deep Learning Super Sampling, or DLSS, coming in the autumn. It is known to increase frame rates by rendering games at a lower resolution and using AI to enhance the image, helping games run more smoothly on less powerful hardware.

The controversy with the new DLSS 5 is that gamers are concerned that it uses generative AI to change the look of the game. Huang unveils DLSS 5 sizzle reel Photorealistically enhanced versions of characters in popular games such as Resident Evil Requiem, StarfieldAnd Hogwarts Legacy.

Miller of Kinda Funny Games said, “I play video games because they’re an art. And so I like to see the creator’s thumbprint in what I’m doing.” “It raised the hairs on the neck of a lot of people in the video game industry because we’re dealing with so many layoffs, so many studio closures.”

As it grapples with the post-pandemic recession, the gaming industry has seen studio closures, game cancellations, and thousands of job cuts at giants like. epic gamesMicrosoft’s Xbox, and Sony’s PlayStation.

Gettys was a fan of Nvidia’s previous versions of DLSS for making gaming more accessible on a low budget.

“This technology is amazing in what it can do to run games on low-end PCs,” he said. “But then to add this generative AI stuff, it feels like a slap in the face.”

Gettys’ bigger fear is that this is a step toward fully AI-generated games, which he considers “100% the goal.”

Elon Musk has already considered its possibilities. In an October post on X, Musk said His XAI Game Studio Will release “a great AI-generated game” before the end of 2026.

Gettys said, “You’re literally replacing the art that the developers made. And then at a certain point you’re replacing the developers and then their studio closes down.”

Nvidia said in a statement to CNBC, “Games are a creative art that gives developers the opportunity to tell compelling stories and immerse players in incredible worlds. Our RTX technologies are the tools that enable game developers to achieve their creative vision – these include rendering technologies like ray tracing and path tracing, and technologies augmented by AI like DLSS Super Resolution, DLSS Frame Generation and DLSS 5, all work together to deliver the best performance and image quality.”

During his GTC speech, Huang said that AI is “going to revolutionize the way computer graphics is done.”

In a question-and-answer session the following day, Huang responded to the gaming community’s claims that DLSS 5 makes games more uniform.

“They are completely wrong,” Huang said.

He stressed that game developers would still be in control, able to “fine-tune the generative AI” to match their style.

For more than a decade, Nvidia has also offered gaming in the cloud through a service called GeForce Now. The model has evolved to include different subscription tiers – including a free option – that let users stream their games to services like Steam running on Nvidia GPUs in data centers rather than on personal devices.

“You look at Xbox and you look at PlayStation, you see other competitors trying to get the cloud into the hands of gamers in a way that actually makes sense. And Nvidia GeForce Now has really cracked that code,” Miller said.

Gettys told CNBC that Nvidia’s streaming platform is the best “by a large margin.”

“It gives millions of people access to gaming at the highest level, even if they don’t have the latest cards and so on. And it’s really incredible technology,” he said.

advanced precision instruments Nvidia’s top competitor in gaming is its Radeon GPU line.