US PC shipments fell 7.0% year-over-year in Q1 2026 to 15.8 million units, marking the steepest annual decline since Q3 2023. The downturn reflects component supply constraints and cost pressures from surging PC memory and storage prices, compounded by a demand hangover following the Windows 11 refresh cycle. The comparison was also affected by a strong Q1 2025, when tariff-related inventory pull-forward inflated shipments, as well as modest channel stocking in Q1 2026 ahead of anticipated memory price increases.

Supply constraints impact shipments

With DRAM and NAND supply increasingly diverted to AI server applications, rising component costs are eroding vendor margins on entry-level devices, making low-priced PCs increasingly unviable. Shipments of PCs priced under $500 declined 18.7% year-on-year in the quarter. Omdia expects industry-wide declines to continue throughout the remainder of 2026 as supply tightness persists, with full-year US PC shipments forecast to decline 14.4% compared to 2025.

Business upgrades outpace consumer demand

"The impact of component supply constraints on PC shipments materialized in the US market in the first quarter of 2026," said Scott Braverman, Senior Analyst at Omdia. "The consumer segment declined 9.5% year-over-year, worse than the overall market, as many consumers delayed purchase decisions amid higher price tags and challenging economic conditions. Business shipments declined by just 5.0% year-over-year, supported by remaining Windows 11 refresh activity and inventory purchases ahead of further price increases."

According to Omdia’s May forecast, the first half of 2026 is likely to be the stronger period for business PC demand. The component cost environment is expected to keep entry-level prices elevated through 2027, suppressing consumer demand. "Budget-constrained segments also faced pressure, although the education segment declined just 6.2% in Q1 2026," said Braverman. "This was a significant improvement from the double-digit declines recorded in each of the previous three quarters. However, this stabilization is unlikely to hold, as rising prices disproportionately affect the entry-level devices that dominate education procurement. Government procurement also declined as price increases strained already tight public sector budgets. Both segments are expected to remain under pressure through 2026, with meaningful recovery unlikely until 2027."

AI PC adoption drives up prices

"While average selling prices rose just 4% year-on-year in Q1 2026, Omdia expects growth to reach 12% in Q2 and exceed 12% in the second half of 2026 as supply-side headwinds continue to materialize," said Kieren Jessop, Research Manager at Omdia. "In addition, demand dynamics are also driving average selling prices higher as the share of AI-capable PCs grew to 44% of all shipments. Large enterprises in particular are increasingly procuring higher-cost AI-capable PCs."

Business PC ASPs are expected to grow 11% in 2026, with 10% ASP increases in the consumer and government segments. Education ASPs are expected to remain flat as this cost-conscious segment delays PC refreshes due to rapid pricing increases.

US desktop and notebook forecast

Note: Unit shipment in thousands. Totals may not add up due to rounding.

Vendor performance varies

Vendor performance varied significantly in Q1 2026, reflecting differences in segment exposure and pricing dynamics. HP’s 21.6% decline in shipments was the steepest drop among major providers and resulted in HP losing its top spot in the US in Q1 2026. Dell captured the lead with a 25.0% share, posting 1.1% growth despite overall market contraction, while Lenovo also achieved growth of 1.2% to reach 20.0% of the market. Both vendors’ growth was driven by significant consumer segment share gains (4 percentage points each year-over-year), narrowing the gap with Apple and HP. Apple’s shipment decline of 1.6% outperformed the overall market, maintaining a 16.9% share as MacBook adoption continued in business segments where Apple’s presence has grown to 15.3%. Smaller vendors also faced severe pressure, with shipments declining 13.1% as these brands lack the same component procurement leverage as larger competitors.

US desktop and notebook shipments

Note: Unit shipments in thousands. Percentages may not add up to 100% due to rounding.

Half of small business owners expect their revenue to grow in the next three months, reaching the highest level of optimism recorded in three consecutive quarters, according to the Citizens Q3 2026 Business Pulse survey. This rising confidence in individual business prospects contrasts sharply with a decline in faith in the broader U.S. economy. The survey found that only 24% of respondents are extremely or very confident in the national economy, down from 36% in Q2 2026.

"Small business owners are proving they can hold their own, even when the world around them is full of uncertainty," said Mark Valentino, Head of Business Banking at Citizens. "The data is not showing a contradiction, but an opportunity. Those who forge ahead and continue to be nimble and innovative will separate themselves from the competition."

Key Business Challenges

Rising costs and inflation remain the primary obstacle for small businesses. Fifty-one percent of respondents cited these factors as their biggest challenge, outpacing economic uncertainty at 43% and finding and keeping customers at 39%.

Operational Plans

Despite external pressures, business owners are maintaining stable operational strategies. Hiring plans remain largely unchanged, with 64% of respondents planning to keep full-time headcount the same over the next three months. Only 18% plan to increase full-time staff. Similarly, credit appetite is steady, with 67% expecting no real change in their use of loans, lines of credit, or other financial resources.

Survey Methodology

The Citizens Q3 Business Pulse Survey was conducted between June 1 and June 18, 2026, surveying 500 business principals, including owners, founders, partners, CEOs, and presidents. Results are weighted by company size to reflect the U.S. small business population. The survey measures near-term expectations for revenue, hiring, spending, credit usage, and key business challenges.