AMD Counters NVIDIA With Price Cuts on Its Latest GPUs
Last month, AMD (NASDAQ: AMD) revealed the specs and prices for its Radeon RX 5700 and 5700 XT GPUs. The RX 5700, which targets NVIDIA's (NASDAQ: NVDA) RTX 2060, would cost $379 -- $30 more than NVIDIA's card. The RX 5700 XT, which challenges NVIDIA's RTX 2070, would cost $449 -- $50 less than NVIDIA's card.
Then two unexpected developments occurred this month. First, NVIDIA launched new "Super" versions of the RTX 2060, 2070, and 2080 that offered 15% speed boosts. The Super 2060 costs $50 more than its predecessor at $399, while the Super 2070 and 2080 cost the same as their regular counterparts, at $499 and $699, respectively.
Shortly afterward, AMD retaliated with last-minute price cuts on the 5700 and 5700 XT, lowering their prices to just $349 and $399, respectively, in advance of a July 7 launch. Let's see if these latest moves will tilt the market's balance in either chipmaker's favor.
Image source: Getty Images.
Making sense of the madness
AMD and NVIDIA are forcing gamers and investors to digest a lot of information at once. To make sense of this, we should compare each tier of cards separately.
AMD's RX 5700 ($349) now competes against two cards -- NVIDIA's RTX 2060 ($349) and the new Super RTX 2060 ($399). AMD's GPUs are built on the newer 7nm process, while NVIDIA's GPUs are built on the older 12nm process (or possibly an 11nm one for the Super GPUs).
However, early leaked benchmarks indicate that the RX 5700 and the original RTX 2060 offer similar performance, with each card faring better in certain games. This explains why AMD lowered the RX 5700's price and why NVIDIA launched the Super 2060 -- $50 more for a 15% speed bump (which widens its gap against the RX 5700) is a tempting proposition for many gamers.
Meanwhile, AMD's RX 5700 XT ($399) competes against NVIDIA's RTX 2070 and Super RTX 2070 (both $499). Early benchmarks indicate that the RX 5700 runs slightly slower than the standard RTX 2070, but a leaked benchmark of both cards running the PC version of Final Fantasy XV (which NVIDIA helped develop) shows the Super RTX 2070 beating the RX 5700 by a wide margin. Whether that gap will be consistent across other games and justifies an extra $100 remains to be seen.
Final Fantasy XV. Image source: Square Enix.
But that's not all. AMD also lowered the price of its 50th Anniversary Edition RX 5700 XT (which offers a 5% to 10% speed boost) from $499 to $449 -- which might make it a more worthy competitor for the Super RTX 2070.
Last, AMD and NVIDIA are also selling two premium cards, the Radeon VII and RTX 2080, for $699. AMD didn't lower the Radeon VII's price, but NVIDIA also gave the RTX 2080 a Super upgrade for the same price. Furthermore, NVIDIA is bundling two free upcoming games -- Remedy Entertainment's Control and Bethesda's Wolfenstein: Youngblood -- with the purchase of any Super RTX card.
NVIDIA has the edge, but does it matter?
AMD's price cuts were surprising, but NVIDIA's "super" GPUs still give it an edge. The $399 Super RTX 2060 is arguably a better value than the $349 RX 5700. The Super RTX 2070 is pricier than the RX 5700 XT, but NVIDIA's inclusion of two full games in its bundle sweetens the pot.
But, despite all that sound and fury, AMD's Radeon RX and NVIDIA's RTX GPUs might not matter that much to mainstream gamers. NVIDIA's mid-range GTX 1060, which was launched three years ago, was still the most widely used graphics card on Steam in June. Top PC games -- Fortnite, League of Legends, CS:GO, Hearthstone, and Minecraft -- don't require high-end cards.
As for high-end "triple-A" games, more gamers could buy cheaper gaming consoles or opt for new cloud gaming services (like Stadia or PS Now) instead of upgrading their gaming PCs. That's troubling for both NVIDIA and AMD, but AMD generates less of its revenues from gaming GPUs than NVIDIA does. If sales of gaming GPUs fade, AMD can still fall back on its sales of APUs for gaming consoles and CPU sales for PCs and data centers.
NVIDIA, which generated nearly half its revenue from gaming GPUs last quarter, desperately needs to hold AMD off and revive interest in its high-end GPUs. NVIDIA's latest moves could preserve its lead over AMD, but it might not matter if gamers stick with older GPUs or buy lower-end cards like the GTX 1650, which costs just $149.
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Leo Sun has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends NVIDIA. The Motley Fool has a disclosure policy.
