Nah. You aim for the crown always and never stop, no matter what hand you have to play with or what kind of architectural deficit you're suffering.
If Nvidia had cancelled GF100 that generation would have resulted in something like a straight duopoly.
If Nvidia had abandoned the high end with the 200/Tesla series while AMD had went for the crown with 4000/Terrascale, then in one generation AMD would captured most of the market.
If Nvidia had abandoned the high end with GeforceFX as opposed to pulling out every possible stop to make a claim for the crown, Lord only knows how much damage that would have done to them. A lot though.
What killed Radeon as an actual competitor is the positive feedback loop of MBA-brained midwittery that began as a response to the failure of R600. In the hypothetical universe where R600 hadn't failed, then some future failure would have kicked off the self destructive cycle instead.
If AMD had bought Nvidia instead of ATI, as was the original plan, then given time they would have done the exact same thing to Nvidia (assuming Jensen is out of the picture).
This.
If AMD had bothered to aim for the top they would have won 5 gens on the trot with 500mm ish designs.
RV770 was ~250mm in the 4870 , 500mm on the same design would have been a 1600 shader monster and given us close to 5870 performance way earlier, it would have crushed GT200 entirely.
Cypress was ~330mm in the 5870, a 500mm design would have been a 2400 shader monster and would have handily bested the GTX 480 and probably gone toe to toe with the GTX 580.
Caymen was also ~330mm so a 500mm design would also have been a 2400 or whatever shader monster that would have been faster than the GTX 580.
Tahiti in the 7970 was also around the 330mm mark so again a 500mm design would have been faster than Hawaii was 2 years earlier, that would have been faster than the GTX 680 and it would have been faster than the GTX 780Ti and the GTX Titan. It probably would have forced NV to release a GK100 based 680 rather than allowing them to go with GK104 and then the refresh GK110 in the 780 would have been a very minor bump.
Hawaii was closer to 450mm so there was room for a 56CU design rather than the 44 they went with. Give it 7gbps ram rather than the 5gbps they did give it and you also have enough bandwidth without needing HBM. That gives you pretty close to the cut down Fury performance years earlier. It would have been faster than the 980 but behind the 980Ti although it probably would have released around the time of the 780Ti so would have been a clear step ahead.
Maybe the extra income from having top tier parts and the extra experience with larger designs would have meant Fiji was actually better than it ended up being.
I know we complain about NV shrinkflation of putting smaller GPUs further up the stack but ATi / AMD actually started that trend and allowed NV to use 330mm dies in the x80 range instead of their older designs that used 500mm designs in that segment.
EDIT: I credit these decisions with where we are today in the GPU market, it allowed NV to become the defacto performance champion and grow the mindshare that comes with it and then they started to do what they did with CUDA and create a walled garden, g-sync, Ray Tracing, DLSS, NVenc etc etc are all just features that allow them to have none hardware reasons to buy their product, it gives them an amount of protection should they misfire which they clearly are with Blackwell but give it 6 months when the supply issues are behind us and I don't think the successful 9000 series launch will make that much difference, primarily because there is no way AMD are going to shift away from their product allocations so they won't try and fill in the gap in the market with extra product.