As expected, the desktop GPUs that AMD (AMD) - Get Report just unveiled put it on better competitive footing. But they won't necessarily do much to upend Nvidia's (NVDA) - Get Report dominance in the high-end and upper-mid-range portions of the gaming GPU market.
At a press event on Monday at the E3 gaming conference, AMD unveiled the Radeon RX 5700 XT and 5700, the first GPUs based on its Navi architecture, which AMD first shared details about in late May at the Computex trade show. The products will be available on July 7 and carry suggested graphics card prices of $449 and $379, respectively. They're designed to compete against Nvidia's GeForce RTX 2070 and 2060 GPUs, which carry suggested graphics card prices of $499 and $349, respectively.
AMD also unveiled the Ryxen 9 3950X, a 16-core monster of a CPU that it declares to be the "ultimate desktop processor for gaming." The chip, meant to be the flagship product for a pretty competitive third-gen Ryzen desktop CPU lineup that was first revealed at Computex, will sell for $749 and is expected to be available in September.
AMD's shares, which had risen 2.5% on Monday after Microsoft (MSFT) - Get Report announced that an AMD processor featuring a Ryzen CPU and Navi GPU will power its next-gen Xbox, is down 3% in Tuesday trading following the latest chip unveilings. Nvidia's shares are up close to 1%.
During its E3 event, AMD said the 5700 XT will provide up to 9.75 teraflops (TFLOPS) of single-precision computing performance, and that the 5700 will provide up to 7.95 TFLOPS. On paper, those specs suggest the chips will comfortably outperform the Nvidia GPUs they're competing against, given that the RTX 2070 and 2060 top out at 7.5 TFLOPS and 6.5 TFLOPS, respectively.
However, the benchmarks that AMD showed off at its event had the chips only slightly outperforming (on average) the RTX 2070 and 2060 when playing popular games at a 1440p (Quad HD) resolution. And notably, AMD didn't share any benchmarks for 4K-resolution performance.
AMD's Navi architecture appears to be much more power-efficient than the older Vega architecture that has been powering (among other things) its high-end gaming GPUs. But the 5700 XT and 5700 still appear to be a little more power-hungry than the Nvidia GPUs they're competing against, given their stated graphics card thermal envelopes (TDPs) of 225 watts and 180 watts.
One also can't ignore the fact that for PC gamers willing to pay top dollar for a high-end experience, Nvidia sells two GPUs that are more powerful than the RTX 2070 -- the $699 RTX 2080 and the $999 RTX 2080 Ti. And if a recent rumor is accurate, Nvidia is set to launch "Super" versions of its various RTX GPUs that are a little more powerful than the original versions, while also cutting prices a bit for the originals.
Last but not least, Nvidia's RTX GPUs all feature specialized processing cores to handle real-time ray tracing, a graphics rendering technique that can deliver photorealistic imagery, as well as deep learning super sampling (DLSS), a technology that uses AI/deep learning algorithms to speed up the rendering of demanding game scenes. As the number of games supporting ray-tracing and/or DLSS grows, the value of those cores to gamers grows with it.
To be fair, AMD did show a technology called Radeon Image Sharpening, which can add more detail to the high-contrast parts of a game scene without affecting performance. However, with respect to ray-tracing, AMD only said it plans to support hardware-accelerated ray-tracing in next-gen GPUs. And even this will only be for "select lighting effects"; AMD says it expects cloud servers will be needed to deliver full-scene ray-tracing.
Throw in the fact that Nvidia's RTX GPUs are holding their own in spite of relying on an older 12-nanometer (12nm) manufacturing process -- Nvidia GPUs that (like AMD's Navi chips) rely on a 7nm process might arrive next year -- and Nvidia still appears to be on very sound footing in the $300-plus part of the gaming GPU market.
To its credit, AMD has done an admirable job of developing very competitive, 7nm desktop and server CPU lines that should fuel share gains against Intel (INTC) - Get Report in the coming quarters. And the company does have some notable GPU-related success stories it can point to as well, including design wins for next-gen consoles, Apple (AAPL) - Get Report Macs and Alphabet/Google's (GOOGL) - Get Report Stadia cloud gaming service.
But with AMD competing against both Intel and Nvidia while having an R&D budget meaningfully smaller than that of either company, it's impossible for every product it launches to be a smash hit that easily offers a better value proposition than the competition. High-end gaming GPUs are one of those spots where the competition remains in pretty good shape for now.