Caporegime
I'm sure you're correct, but I don't understand why you think they should undercut. They're a commercial enterprise and they want to obtain the best possible price for their product.
(This is the fault of nVidia in pushing up the market prices in the same way Apple has dragged up the price of every other flagship phone).
AMD can price the way they want to, if they want to price their products at the same as Nvidia and offer equivalent price/performance then the blame is still on AMD's head as well for poor price/performance improvements.
Nvidia has the marketshare, AMD doesn't, if AMD want to disrupt the market they'd need to pull another Ryzen.