Dell Technologies shares fell 11% Wednesday, leading a sell-off in data-center equipment stocks after Barclays downgraded Dell, Hewlett Packard Enterprise and NetApp to Equal Weight from Overweight.
Barclays said it saw no meaningful enterprise-AI growth inflection yet. Its analysts argued that recent revenue strength has been driven more by higher memory costs passed through to customers than by a broad AI-related hardware refresh. Businesses are typically directing about 5% of their IT budgets to AI, while hardware represents roughly one-quarter of enterprise-AI spending, the analysts said.
That view challenged a major stock-market trade this year. Dell shares had risen more than 300%, HPE about 160% and NetApp had doubled before Wednesday’s declines, as investors anticipated years of server, storage and networking demand tied to AI systems. The Barclays analysis warned that revenue growth could slow if memory prices normalize or decline.
The company also said higher DRAM and NAND costs and supply constraints increased server selling prices, while AI-server shipment timing affected results.
The pressure spread beyond the three downgraded companies. Oracle and Super Micro declined, while AI infrastructure operators and heavily financed AI firms also fell as hotter inflation data increased expectations for another Federal Reserve rate hike. Higher borrowing costs could raise the expense of building data centers and purchasing AI chips, adding a financing concern to the questions about enterprise demand.
Memory stocks were already under pressure after China’s ChangXin Memory Technologies reported progress on a new chip structure. Micron was down 11% for the week, SK Hynix had fallen 13% in U.S. Trading and Western Digital had dropped more than 8%, deepening the market’s focus on whether memory-driven pricing gains can persist.