Dell Technologies (DELL) shares fell 11.6% on Wednesday to close at $507.93 after Barclays downgraded the stock, with a warning that enterprise AI spending may not be enough to sustain an increase in the sales of servers.
Barclays downgraded Dell from Overweight to Equal Weight and lowered its price target from $603 to $574. Analysts cited valuation concerns after the stock surged more than 300% in 2026, warning that growth could slow as memory prices normalize.
High memory-chip prices have helped hardware makers charge more for servers, but that advantage could fade as costs ease.
Barclays also downgraded Hewlett Packard Enterprise (HPE) and NetApp to Hold-equivalent ratings, citing the same concerns over growth and valuation.
A sector-wide drop, Dell is not alone
The technology sector as a whole saw a drop of over 3% on October 14, pulling Oracle and Nvidia lower, according to GuruFocus. Oracle dropped 9%, bringing its losses for the year to 33%.
Neocloud provider CoreWeave plunged 15%, wiping out its gains for 2026, while Nebius also fell. Together, these AI-linked companies lost an estimated $80 billion in market value.
A September inflation reading that was way hotter than expected revived fears of higher borrowing costs, pushing one CoreWeave bond yield toward 15%. Since most of the AI expansion is funded by debt, rising rates are a direct threat to the companies financing it.
Memory stocks also saw some selling pressure, with Micron down 11% for the week and South Korea’s SK Hynix falling 13% in US trading after China’s ChangXin Memory Technologies reported progress on a new chip design.
Dell bulls point to recent numbers
Dell reported a record $95 billion AI server backlog as infrastructure revenue jumped 89% year over year in its latest quarter. The company expects AI server revenue to triple to $75 billion in fiscal 2027, with a potential increase to $100 billion by fiscal 2028.
Michael Dell expects demand for AI infrastructure to outpace supply from now till 2030, although he has acknowledged uncertainty over how quickly chipmakers can expand capacity.
Despite the downgrade, Wall Street remains broadly bullish on Dell, with analysts holding a consensus Moderate Buy rating and an average price target of around $598.
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