Dell Slides 6.8% as Barclays Questions Its AI-Server Boom

Dell Technologies fell 6.8% on Thursday, closing at $473.39, a second straight day of steep losses after Barclays downgraded the stock and cast doubt on the strength behind its AI-server sales. It followed an 11% drop Wednesday. The two sessions pulled Dell well off the highs it set over the summer.

Barclays points at memory prices

Barclays analyst Tim Long cut Dell to equal weight from overweight and trimmed his price target to $574 from $603. The call questioned what is driving Dell’s reported growth. Long told clients he sees no meaningful inflection in enterprise AI spending, and that a shortage of memory chips, not a surge in new orders, has pushed component prices higher and lifted server revenue along with them. If those prices ease, he warned, the revenue line could cool with them. He also flagged thin profitability on the AI-server business, where he pegged operating margins near 5%, so rapid sales growth need not produce rapid profit growth. The warning was narrow.

Barclays was not calling the business a bust. The firm still models tens of billions in AI-server revenue for Dell this fiscal year, set against the $95 billion AI-server backlog Dell reported last quarter. Its downgrade was a question about the quality and staying power of that growth, aimed at a stock that has been one of the year’s biggest winners. The same note cut two other hardware makers, Hewlett Packard Enterprise and NetApp, to equal weight, a sign the caution was a broad read on the sector’s valuation.

The slide widens across AI hardware

The two-day drop fits a rougher month. Dell is down about 16% over the past 30 days, and Thursday’s close left it 19.5% below its 90-day high of $588.40, though still 28% above the 90-day low of $369.64. Volume marked a crowded exit. Some 16.4 million shares changed hands, about 2.3 times the 20-day average.

The selling clustered in AI hardware. Nvidia, Advanced Micro Devices and Super Micro Computer all fell, and chip suppliers in Asia dropped overnight, as investors reweighed how much of the AI buildout is running on borrowed money and how durable the spending will prove. The broader U.S. market barely moved on the day, which marked the weakness as specific to the AI-hardware trade. The backdrop was already tense. A hotter-than-expected September inflation report earlier in the week had lifted bond yields and revived bets on higher interest rates, a shift that falls hardest on the richly valued technology names that led the market up.

What will test the call

Two things will test Barclays’ thesis. The first is the price of memory. If chip costs stay high, Dell’s revenue keeps its current shape; if they fall, the warning gets its trial. The second is Dell’s own numbers. The company’s next quarterly report is expected in late November, though it has not set a date, and management’s read on AI-server orders and margins will weigh more than any one session. Until then, the market is left pricing a question it cannot yet answer.

This is a general-market summary for information only — not investment advice, and not a recommendation regarding any security.