If you need another reason to hate generative AI, the technology is indirectly tanking gaming hardware sales. Industry analyst Circana just released a new report on U.S. game market trends for July 2026, and the numbers don’t look good.

“Hardware spending fell to a July low not seen since 2020,” Circana’s Mat Piscatella wrote on Bluesky. In July 2020, the game industry was in the midst of global supply chain issues caused by the COVID-19 pandemic, which made it difficult to purchase many game consoles.

In addition to game sales dropping 9% from last July, gaming hardware sales fell a whopping 29% from last year.

As for where AI comes into play, the tech industry’s rush to build AI data centers has consumer electronics. This situation has been dubbed the “RAM-pocalypse” or “RAM-geddon.” Console manufacturers have raised hardware prices significantly to cover rising component costs amid scarcity. “Higher hardware prices driven by the RAM and component crisis have significantly impacted the selling rates of both PlayStation 5 and Xbox Series X, with a price hike for Nintendo Switch 2 hardware coming on September 1st, 2026,” Piscatella wrote.

July 2026 U.S. Video Game Market Highlights Thread from Circana - U.S. video game spending dropped 10% in July, to $4.5 billion, despite the debut of several hit new releases. — Mat Piscatella (@matpiscatella.bsky.social) 2026-08-20T13:05:47.456Z

July 2026 U.S. Video Game Total Spending - Mobile content was the biggest driver of the overall decline, with both Console and PC content also fell year-on-year (mobile spending provided by Sensor Tower). Hardware spending fell to a July low not seen since 2020. — Mat Piscatella (@matpiscatella.bsky.social) 2026-08-20T13:05:47.457

Each major console manufacturer has raised console prices in recent months. Sony upped the price of the base PS5 from $499.99 to $549.99 in August 2025, then increased it again this April by another $100. The console is now $649.99, $150 more than at release in 2020. Meanwhile, Microsoft’s Xbox Series X at launch. The Nintendo Switch 2 is getting a $50 price hike in September.

At this point in a console generation, these systems would normally see significant price cuts, something that helps bolster player bases and drive software sales. With the ongoing RAM and component shortage undercutting this trend, it’s a bit unclear how Sony and Microsoft are going to handle the next generation of consoles.

Microsoft has made the upcoming Project Helix sound like an expensive and niche platform, while Sony president and CEO Hiroki Totoki recently made it clear that Sony hasn’t set a release date for PlayStation 6. In response to the memory chip shortage, Totoki said, “We need to take some action. Otherwise, we cannot survive in this landscape.” Needless to say, the game industry has seen better days.