Dell Shares Slide 11% as Barclays Downgrades AI Hardware Makers
Shares fell 11% on Wednesday after Barclays downgraded the company, HPE and NetApp over concerns that enterprise AI spending is not yet translating into…
Dell shares fell sharply on Wall Street on Wednesday, putting fresh pressure on companies tied to the artificial intelligence buildout. Barclays downgraded Dell, Hewlett-Packard Enterprise and NetApp, saying enterprise AI adoption has yet to produce a meaningful increase in spending on their hardware.
The sell-off reached other data center equipment companies, including Oracle and Super Micro. Investors are weighing whether demand for AI infrastructure can support the level of spending expected by the market.
Dell tumbled 11%, leading the drop. Barclays lowered its ratings on Dell, HPE and NetApp to the equivalent of hold from buy in a report to clients, citing “a significant run and on enterprise AI timing.”
Barclays points to memory costs
The analysts said they had not seen a “meaningful AI inflection” in enterprise spending for the three companies. They argued that strong enterprise revenues were more likely tied to higher memory costs than to businesses adopting AI at scale.
“We believe the strong enterprise revenues are more of a function of memory costs than a move to enterprise AI at this time,” the Barclays analysts wrote.
Memory prices have risen amid a global shortage, and infrastructure companies have passed higher costs on to customers, according to the analysts. They said normalizing and eventually declining memory prices could weigh on revenue tied to data center infrastructure.
The concern matters because Dell and its peers have benefited from expectations that companies will buy large volumes of servers and other equipment to support AI systems. A weaker pace of enterprise purchasing could challenge those expectations and put pressure on sales as memory prices change.
Barclays said businesses typically allocate just 5% of their IT budgets to AI. The analysts also estimated that only about a quarter of total enterprise AI spending goes toward hardware, suggesting that demand for equipment has not yet matched the scale of the broader AI investment story.
AI infrastructure stocks face scrutiny
Data center server makers and other backend equipment suppliers have been favored on Wall Street this year because investors expected sustained demand for systems linked to AI chips. Dell had risen more than 300% this year before the latest decline, while HPE had gained about 160% and NetApp had doubled, according to CNBC.
That optimism has recently faced pressure. CNBC reported that concerns about OpenAI revenue figures and the prospect of rising interest rates have raised questions about companies financing the buildout with debt.
Oracle fell 9% on Wednesday and was down 33% for the year. Neocloud company CoreWeave plunged 15%, wiping out its gains for 2026.
Memory-related shares also slid this week after China’s ChangXin Memory Technologies reported progress over the weekend on a new chip structure. Micron was down 11% for the week, while South Korea’s SK Hynix had fallen 13% in U.S. trading and Western Digital had dropped more than 8%.
The Barclays downgrade adds a direct test for the AI infrastructure trade: whether enterprise customers begin spending more on hardware, or whether recent revenue growth largely reflects elevated memory costs.
Source: cnbc.com
