They really need to treat this like Zen - Zen 2 where they were super aggressive in the space to claw back marketshare. It worked.
You know what worked? Fighting Intel when Intel couldn't put up decent competition.
Fighting NVidia is a different story. NVidia is almost entirely focused on GPUs (albeit on AI / Datacenter these days, but still close enough to video games to benefit).
Just dropping prices without acknowledging the long-term damage to AMD's brand is a bad idea. You can't just keep dropping prices each time NVidia raises them. If people aren't willing to jump for a nearly equivalent card at -$50 or -$100, then its not worth chasing them to -$150 or -$200.
Especially when NVidia in practice is +$200 in practice due to scalpers. So there's multiple-hundreds of dollars difference between NVidia cards and their equivalent AMD card as it is.