Shares of Dell fell 11% on Wednesday and dragged down other data center equipment names on growing concerns that companies’ spending on artificial intelligence does not justify AI development.
Hewlett-Packard Company, Oracle And Super Micro all joined in the downward slide.
In a report to clients Wednesday, Barclays analysts downgraded Dell, HPE and NetApp“after significant execution and on enterprise AI timing.”
Makers of data center servers and other back-end equipment have been favored on Wall Street this year due to optimism that they can sell huge volumes of equipment tied to demand for AI chips and systems in the coming years. Dell has been one of the market’s top performers, up more than 300% this year, while HPE has jumped about 160% and NetApp has doubled.
However, sentiment towards the AI infrastructure sector has changed recently, in part due to concerning revenue figures. OpenAI and more broadly, out of fear that rising interest rates could create a difficult environment, as much of construction relies on debt. Big borrower Oracle fell 9% on Wednesday and is now down 33% for the year while Neocloud CoreWeave plunged 15%, erasing its 2026 gains.
Analysts at Barclays said they did not see a “significant AI shift” in corporate spending on Dell, HPE and NetApp, lowering the rating of each to the equivalent of a buy hold. Instead, they attribute the increase in revenue to the global memory shortage and note that infrastructure companies have passed on the higher price of memory to their customers.
“There is a growing sentiment that enterprise adoption of AI is driving a hardware refresh,” Barclays analysts write, adding that companies typically allocate only 5% of their IT budgets to AI. “We believe high enterprise revenues have more to do with memory costs than the transition to enterprise AI at this time.”
Barclays analysts also found that only about a quarter of companies’ total AI spending is on hardware. They said normalization and then falling memory prices could weigh on infrastructure-related revenues.
Memory is a notoriously cyclical sector, and stocks took a hit this week after China’s ChangXin Memory Technologies, or CXMT, announced progress over the weekend on a new chip structure. Micron is down 11% for the week, while South Korea’s SK Hynix fell 13% in U.S. trading and Western digital fell by more than 8%.
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