I'll suggest something even more "absurd". They'll do both, consoles and PCs.
We know already AMD is developing the NX chip. The "core" of the next console could hypotetically be just a cheap SoC that can be integrated into selected AMD GPUs.
You'll still have an affordable console for kids/families and AMD videocards for enthusiasts.
Nintendo could expand their audience and AMD could get exclusive games for their video cards, it's a win-win :P