The PC Collapse Has a Winner -- and It's Not Who You Think

There was supposed to be a massive tailwind for the PC market this year. Windows 10 reached end-of-life in late 2025, meaning that somewhere around 1 billion PCs worldwide stopped receiving security updates. This is less of an issue in the consumer PC market, but it's a big deal in the business PC market.

PC OEMs like HP (NYSE: HPQ) were set up for success in 2026, but the AI boom has complicated the situation. Enormous demand for DRAM and NAND chips from the AI infrastructure build-out, coupled with memory chip manufacturers shifting production to server products, has left the PC market with scraps. Memory chip prices have surged, pushing up the bill of materials and forcing price increases.

Gartner expects PC prices to surge by 17% this year, prompting consumers and businesses to hold onto their current PCs for longer. Budget PCs as a category could essentially disappear, leaving a large swath of consumers in a bind. Gartner expects PC shipments to tumble by 10.4% in 2026.

HP is an obvious loser in this scenario, but there's a surprising winner as well: Apple (NASDAQ: AAPL).

Image source: Getty Images.

HP will get hit hard

How fast are memory prices rising? HP disclosed in February that memory and storage are expected to account for roughly 35% of its PC bill of materials this year. That's up from 15% to 18% in the previous quarter.

There's not a ton HP can do to mitigate rising memory prices. Long-term supply agreements could help, but they'll leave HP on the hook if memory prices reverse. Shipping PCs with less memory and storage content is an option to keep prices down. HP could also accept lower profit margins to protect its market share.

Personal Systems revenue rose 11% year over year for HP in the first quarter of fiscal 2026, but operating margin declined a bit from the previous quarter. HP's PC revenue could still grow in 2026 if price increases offset volume declines, but the huge surge in input costs will knock down profitability. The company expects its PC operating margins to be below its long-term target for the rest of the year.

HP has no meaningful business that will benefit from the AI boom, unlike other companies that sell both PCs and servers. For HP, soaring demand for AI infrastructure is all downside.

How Apple could win

Apple is also exposed to rising memory chip prices across its entire device business. However, the company is seizing an opportunity to bring Windows PC users into its ecosystem.

Apple announced the MacBook Neo last week. The 13-inch entry-level MacBook starts at $599, a price that PC OEMs like HP will have trouble hitting as memory prices spiral higher. The Neo is powered by the A18 Pro chip, the same SoC used in the iPhone 16 Pro family. Higher-end MacBooks use Apple's M-series chips, but the underlying technology is essentially the same.

Apple has equipped the Neo with 8GB of unified RAM, shared between the CPU and GPU, as well as a 256GB solid-state drive. These are really the bare minimums for a usable PC, but it's enough for a solid entry-level experience. Early reviews have been positive, although full third-party reviews haven't yet arrived ahead of launch.

Apple is playing the long game here. If there was ever a time to launch a budget MacBook, it's right now. With memory prices driving up the cost of Windows PCs, a $599 MacBook should be appealing to budget-conscious consumers. Apple also offers the Neo to the education market for a discounted price of $499.

If Apple can grow its Mac install base and steal away market share from Windows-based PCs, the company will be setting up its Mac business for stronger growth down the road. Once the memory situation normalizes and the macroeconomic environment improves, Apple will have a larger base of Mac users eager to upgrade when the time comes.

Not all good news for Apple

While Apple could win market share in the PC business amid the memory crunch, the company will also have to absorb higher memory prices for its iPhone, iPad, and other devices. Apple certainly has some pricing power, but users can always delay upgrades. Annual iPhone upgrades are largely incremental these days, so the upgrade cycle could get stretched out.

Overall, the memory chip shortage may be a negative for Apple in the near term. However, the company is being aggressive with the MacBook Neo, and it's laying the foundation for a stronger Mac business in the years ahead.

Timothy Green has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple and HP and is short shares of Apple. The Motley Fool recommends Gartner. The Motley Fool has a disclosure policy.