Dell stock plunged 11% on Wednesday, pushing other data center equipment stocks lower on growing concerns that companies’ spending on artificial intelligence doesn’t justify the AI ramp-up.
hewlett packard enterprise, oracle and super micro All are joined by a downward slide.
In a report to clients on Wednesday, Barclays analysts said Dell, HPE and netapp“Timing for enterprise AI after critical execution.”
Makers of data center servers and other back-end equipment have been favored on Wall Street this year on optimism that they will sell large quantities of equipment tied to demand for AI chips and systems for years to come. Dell is up more than 300% this year and is one of the best-performing companies on the market, while HPE is up about 160% and NetApp is up 2x.
However, sentiment towards the AI infrastructure space has recently changed. This is due to concerns about some companies’ bottom lines. OpenAI And more broadly, because much of fiscal consolidation relies on debt, there are concerns that rising interest rates will create a difficult environment. Heavily-borrowed Oracle fell 9% on Wednesday and is now down 33% for the year, while NeoCloud core weave fell by 15%, wiping out gains in 2026.
Barclays analysts said they saw no “significant change in AI” in corporate spending for Dell, HPE, and NetApp, and downgraded each to the equivalent of a “hold” rating from a “buy.” They instead attributed the revenue increase to a global memory shortage and noted that infrastructure companies are passing on higher memory prices to customers.
“There is a growing sentiment that the introduction of enterprise AI will result in hardware innovation,” Barclays analysts said, adding that companies typically allocate just 5% of their IT budgets to AI. “At this point, we believe the strength in enterprise revenue is due to the impact of memory costs, not the transition to enterprise AI.”
Barclays analysts also found that only about a quarter of a company’s total AI spending goes to hardware. They said normalization and eventual decline in memory prices could weigh on infrastructure-related revenues.
Memory is a notoriously cyclical business, and shares fell this week after China’s Changxin Memory Technology (CXMT) reported progress on a new chip structure over the weekend. Micron fell 11% for the week, and South Korea’s SK Hynix fell 13% in U.S. trading. western digital It fell more than 8%.
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