Nvidia faces backlash from gamers who feel abandoned for AI

In its first 30 years, Nvidia He wasn’t a household name unless you were an actor. Now it looks like some of the original fan base has been left behind, as AI has turned the chip maker into the world’s most valuable company.

“The gaming segment is no longer the driver of the company. There was a point where it clearly was,” said Stacy Rasgon of Bernstein Research.

Nvidia popularized graphics processing units, or GPUs, that enable high frame rates and rendering that make the best video gaming possible.

When Nvidia released its first GPU, the GeForce 256, in 1999, it laid off most workers and went to the brink of bankruptcy to make it happen. Gamers brought Nvidia back from the brink by purchasing the new type of processor.

Now, with the increasing demand for artificial intelligence, almost all of Nvidia’s income comes from products that serve this sector rather than games. As AI chip making tightens the supply of available memory, Nvidia has had to make tough decisions about priorities.

In a memory-constrained reality, it’s no surprise that Nvidia is prioritizing much more profitable data center GPUs like Hopper and Blackwell.

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

“I understand they’re going to come after this. And that breaks my heart,” said Greg Miller, co-founder and host of the popular video game podcast. Daily Very Funny Games In an interview with CNBC.

“Dance what brought you. The players brought you to this point,” Miller added.

If analysts’ predictions are correct, 2026 will be the first year in three decades that Nvidia does not release the next generation of its consumer GeForce line of graphics processing units.

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

The current RTX 50 series GeForce GPU was introduced at CES in January 2025.

But with 2026 CES and GTC in the rearview mirror, some are worried that this will be the first year without a new generation, even though Nvidia usually announces new hardware in late September.

While this represents a major strategy pivot, some players say it’s not a bad move for their budgets.

“It’s kind of hard to keep up with it. You can’t upgrade every year, so I think it’s actually in the service of the players out there to take some time off and wait for a generation to really matter,” Miller’s Kinda Funny Games co-founder Tim Gettys said.

Nvidia’s current era of AI dominance began two decades ago with the release of the CUDA software toolset in 2006. Suddenly developers could use GPUs for general-purpose computing rather than just graphics.

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

Although Nvidia hasn’t stopped making gaming GPUs, it has signaled a new focus on GPUs for AI in 2020. acquired high-performance computing chip maker Mellanox Technologies for $7 billion.

In response, Nvidia launches RTX 50 series gaming GPUs $299 Up to $1,999.

During cryptocurrency peaks in 2018 and 2021, Nvidia’s GPUs sold for up to three times their list price on online markets, as they were once key to mining Bitcoin and Ethereum.

Although prices dropped when mining changed direction in 2022, Nvidia’s current RTX 5090 GPU is still selling for twice its retail price online.

The high demand for last year’s generation may reduce Nvidia’s motivation to release a new version this year.

Industry reports It suggests that Nvidia plans to cut production of its latest gaming GPUs by up to 40% as it faces a massive shortage of the general-purpose memory needed to make GPUs.

Dynamic Random Access Memory, or DRAM, enables fast, temporary data storage so the GPU can run parallel tasks.

PCs with Nvidia’s gaming GPUs are bearing the brunt of the DRAM shortage. When memory prices increase, the cost of producing GPUs increases and this cost is passed on to consumers.

Gartner’s guess PC prices will increase by 17% this year, causing PC shipments to decrease by 10.4%.

“With all of this getting so expensive, it’s concerning to see prices on the gaming side rising with no signs of reversal, and then Nvidia is clearly going after a completely different category of consumer,” 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 higher-cost, higher-margin AI chips.

“If there are disruptions or delays in the game roadmap, they probably can’t make the cards anyway because it’s hard to get the memory,” Rasgon said. “I think every piece of memory that’s out there is actually prioritized based on the AI ​​calculation.”

Higher-performance GPUs like Blackwell and Rubin are covered in dense stacks of a specific type of DRAM known as High Bandwidth Memory, or HBM. About four times as many silicon wafers are needed to produce one gigabyte of HBM than to produce the same amount of more traditional types of DRAM, Rasgon said.

“This dynamic leaves the industry in general lacking the type of memory traditionally used for more consumer-type applications. It just doesn’t exist,” Rasgon said.

Nvidia told CNBC that it continues to ship all of its GeForce GPUs as it sees strong demand and is working closely with suppliers to maximize memory availability.

“If they’re making three times the money and the shareholders are three times happier, then yeah, I think they’re going to stop playing games even though that’s what got them there,” Gettys said.

‘It feels like a slap in the face’

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

Huang announced that next-generation processing software called Deep Learning Super Sampling, or DLSS, will arrive in the fall. It is famous for increasing frame rates by rendering games at lower resolutions and using AI to upscale the image, helping games run more smoothly on less powerful hardware.

The controversy surrounding the new DLSS 5 is that players are concerned that it uses generative AI to change the appearance of the game. Huang introduced DLSS 5 sizzle reel Photorealistic versions of characters from popular games such as Fatal Experiment Requiem, star fieldAnd Hogwarts Legacy.

“I play video games because they are an art form, so I like to see the creator’s fingerprint on what I make,” said Miller of Kinda Funny Games. “This sent shivers down the spines of a lot of people in the video game industry, where we’re dealing with a lot of layoffs and studio closures.”

The gaming industry, struggling with the post-pandemic slowdown, has seen studios closed, games canceled and thousands of layoffs at giants. Epic GamesMicrosoft’s Xbox and Sony’s PlayStation.

Gettys was a fan of earlier versions of Nvidia’s DLSS to make gaming more accessible on a lower budget.

“The technology is mind-blowing in terms of what it can do to make games run on lower-end computers,” he said. “But if we add in this generative AI thing, it feels like a slap in the face.”

Gettys’ biggest fear is that this is a step towards games created entirely by AI, which he thinks is “100% the goal.”

Elon Musk has already addressed the potential of this. In an October post on X, Musk said his xAI game studio It will release “an amazing game created by artificial intelligence” before the end of 2026.

“You literally change the art that developers create. And then at a certain point you change developers, and then their studios get shut down,” Gettys said.

Nvidia said in a statement to CNBC: “Games are a creative art form 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 visions—including rendering techniques like ray tracing and path tracing, and AI-enhanced techniques like DLSS Super Resolution, DLSS Framing, and DLSS 5—all working together to deliver the best performance and image quality.”

AI will “revolutionize the way computer graphics are done,” Huang said in his GTC keynote speech.

In a Q&A session the next day, Huang responded to the gaming community’s claims that DLSS 5 makes games look homogeneous.

“They are completely wrong,” Huang said.

He emphasized that game developers will still have control and will be able to “fine-tune the generative AI” to suit their style.

For over a decade, Nvidia has also offered cloud gaming through a service called GeForce NOW. The model has evolved to include different subscription tiers, including a free option that allows users to stream the games they own to services like Steam that run on Nvidia GPUs in data centers rather than on personal devices.

“You see Xbox, you see PlayStation, you see other competitors trying to put the cloud in the hands of gamers in a way that really makes sense. And Nvidia GeForce NOW has really cracked that code,” Miller said.

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

“It allows millions of people to play at the highest level even if they don’t have the latest cards. And it’s truly incredible technology,” he said.

Advanced Micro Devices It is Nvidia’s biggest rival in the gaming field with its Radeon GPU series.