Barclays Downgrades Dell, Points to Memory Prices as Growth Driver

Dell Technologies shares dropped 11.27% on October 14 after Barclays lowered its rating on the server manufacturer to Equal Weight from Overweight. The investment bank stated that enterprise spending on artificial intelligence has yet to hit a meaningful inflection point.

The downgrade came one day after Michael Dell told CNBC that enterprise AI adoption is only in its early stages. 

Barclays Sees Memory Prices, Not AI, Behind Enterprise Boom

Barclays analyst Tim Long applied the same downgrade to Hewlett Packard Enterprise (HPE) and NetApp. CNBC reported that the analysts have not observed a meaningful AI inflection in enterprise spending across all three companies.

The bank became more cautious on hardware stocks it considers “more aligned with enterprise spending.” Long attributed the group’s revenue growth to the global memory shortage.

“We believe the strong enterprise revenues are more of a function of memory costs than a move to enterprise AI at this time,” the analysts wrote. 

The analysts noted that businesses typically allocate only 5% of IT budgets to AI. Hardware represents roughly a quarter of enterprise AI spending.

They added that memory prices returning to normal levels and eventually declining could pressure infrastructure-related revenue.

Long also reduced his Dell price target to $574 from $603. The new target is approximately 13% above Dell’s October 14 close of $507.93. For HPE, Barclays lowered its target to $77 from $83, leaving about 22% upside from HPE’s $63.11 close.

Even after the decline, Dell stock has risen about 303.5% so far in 2026. The shares now trade nearly 14% below their record close of $588.40 on September 17.

Michael Dell Says Enterprise AI Adoption Is Only Beginning

Michael Dell offered a more optimistic view of enterprise demand the day before the downgrade. In a CNBC interview on October 13, he stated that demand for AI computing still outstrips supply.

“We have had this sort of wave of usage by the frontier labs and certain companies. Now we are starting to see this wave in the enterprise, but it’s really just the beginning. I think there would be a ton of infrastructure deployed around that,” he said.

He also dismissed concerns about an AI bubble, arguing that supply is insufficient for one to form.

Dell’s third-quarter results will likely indicate whether Barclays or its CEO has the more accurate assessment. The company has guided for revenue of $49 billion, an 81% year-over-year increase.