During its Q1 2026 earnings call, HP executives revealed that RAM now represents 35 percent of the company's PC costs, up from 15 to 18 percent last quarter. The surge is attributed to AI-driven demand straining memory supplies. HP anticipates further price volatility and plans to raise PC prices in response.
HP Inc. disclosed during its fiscal Q1 2026 earnings call on February 25, 2026, that the cost of RAM has significantly impacted its personal systems business. CFO Karen Parkhill stated, "We did share last quarter that memory and storage costs made up roughly 15 percent to 18 percent of our PC bill of materials, and we now currently estimate this to be roughly 35 percent for the year." She added that memory costs have increased roughly 100 percent sequentially, with further rises expected as the fiscal year progresses.
Interim CEO Bruce Broussard noted, "We are seeing increased input costs driven primarily by the rising prices of DRAM and NAND." He forecasted that this volatility would persist throughout fiscal 2026 and likely into 2027. The shortage stems from extraordinary demand for AI infrastructure amid limited supply, affecting components like GPUs as well.
To mitigate the effects, HP is implementing price increases, adding new suppliers, and expanding lower-cost sourcing options. Ketan Patel, president of HP's Personal Systems business, mentioned efforts to offer low-memory configurations and cheaper products with fewer features. The company has also halved the time to qualify new materials and used AI-driven processes to lower logistics costs.
Despite the challenges, HP's Personal Systems revenue rose 11 percent year-over-year to $10.3 billion in the quarter, with consumer PC unit sales up 14 percent and business sales up 11 percent. However, executives warned of a double-digit decline in the total addressable market for PCs this year due to higher prices dampening demand. Notably, 35 percent of HP's PC sales now come from AI PCs, though industry signals are mixed, with Dell reporting limited consumer interest in such models.
Samsung has similarly warned of potential price hikes due to AI-induced memory shortages, and analysts predict PC price increases of 15 to 20 percent with reduced RAM specs on lower-tier models.
