As ericloewe said, AMD is more than competitive in the discrete card market. If you check out the tomshardware.com best buy for the price range for video cards, almost every month AMD cards dominate. For example, take a look at the recent 650ti launch for Nvidia. It came out at a price of $150, while the Radeon 1GB 7850 is currently at $160, about 7% more, but has roughly a 15-20% performance increase.
The reason Nvidia is ahead is first that there is a perception of being better made by fan boys, and also, that Nvidia throws a LOT of money at developers to make games "Made for Nvidia" (I don't remember the exact phrase actually), which includes PhysX. I have met quite a few people that for no good reason refuse to buy AMD/ATI cards, but slavishly get Nvidia, even when they would be better off financially and performance wise with an AMD. And, AMD is normally many months ahead in releasing next gen cards.
CPU wise, especially with their APU's for low end machines, they are also very competitive for a light gaming machine. Their latest APU was about twice as fast in games with better game support than the Intel HD 4000 on a core i7. CPU heavy things, the Intel chips were faster. However, I know a few people with laptops with the AMD A8 APU's, and they do not notice any everyday lag, and they can game on a laptop that has discrete video card performance in a $500-600 laptop.