Or rather Nvidia is purposefully restricting VRAM to avoid gaming cards canibalizing their supremely profitable professional/server cards. AMD has no relevant server cards, so they have no reason to hold back on VRAM in consumer cards

Nvidia released consumer RTX 3090 with 24GB VRAM in Sep 2020, AMDs flagship release in that same month was 6900 XT with 16GB VRAM. Who is being restrictive here exactly?

it doesn't matter how much compute you have if you don't have enough vram to run the model.

Exactly. My friend was telling me that I was making a mistake for getting a 7900 XTX to run language models, when the fact of the matter is the cheapest NVIDIA card with 24 GB of VRAM is over 50% more expensive than the 7900 XTX. Running a high quality model at like 80 tps is way more important to me than running a way lower quality model at like 120 tps.

I cannot parse this. The Radeon RX 7900 XTX also has 24GB of vram, so how does it help you run higher quality models? I would understand if it had more ram.

Only the RX 7900 XTX has 24 GB of VRAM at its price point. If I went with an NVIDIA card, I would either have to spend over 50% more on the card, or use much worse models to fit on their 16 GB cards.

They lag on software a lot more than the lag on silicon.