A recent report indicates that both AMD and Nvidia plan to implement significant price increases on their consumer graphics processing units (GPUs) this year. If the details hold true, these changes could take effect as soon as next month.

The source of this information attributes the anticipated price hikes to the rising expenses associated with memory in the computer hardware sector. This surge in costs is largely driven by the construction of extensive AI data centers, leading to a heightened demand for essential components.

According to industry insiders, the price escalation is expected to worsen over time. Initial adjustments are projected for January for AMD and February for Nvidia, with both companies likely to continue implementing gradual price increases throughout the year.

This trend will predominantly affect specific GPU models, including Nvidia’s GeForce RTX 50 series and AMD’s Radeon RX 9000 series, which are already among the higher-priced options on the market. Reports suggest that the Nvidia RTX 5090, originally priced at $1,999, could see its cost soar to $5,000 this year.

The driving forces behind these price hikes are evident. The rising costs of production and increased demand from AI enterprises, such as OpenAI, are significant factors. Nvidia’s CEO, Jensen Huang, has remarked that the next generation of AI technologies will require “100 times more compute” than previous iterations, while Microsoft’s CEO has expressed concern that they lack sufficient power to utilize the GPUs they currently have available.

Regardless of one’s stance on the hype surrounding Generative AI and large language models, the reality is that companies are purchasing GPUs and RAM in anticipation of needing substantial hardware for future developments, driven by consumer demand. This high demand is likely to result in price increases, as both Nvidia and AMD recognize their ability to charge AI companies more due to their reliance on this hardware for ongoing expansion.

For everyday consumers seeking PC parts for gaming, this report suggests a notable increase in prices for these components in the coming months, compounded by typical supply and demand challenges in the hardware market.

In parallel, video game developers are signaling their intention to leverage AI in their production processes. For instance, Square Enix aims to replace 70% of its quality assurance workforce with AI by 2027, while Ubisoft’s CEO believes that AI will create a transformation as significant as the transition to 3D gaming.