The Zhitong Finance App notes that Dell (DELL.US) stock prices plummeted 11% on Wednesday and dragged down other individual data center equipment stocks. The market is increasingly worried that companies' spending on artificial intelligence (AI) will not be enough to support this wave of AI construction.
HPE (HPE.US), Oracle (ORCL.US), and Ultramicros (SMCI.US) also declined.
Barclays analysts downgraded ratings for Dell, HPE, and NetApp (NTAP.US) in a report sent to customers on Wednesday, citing “after a sharp rise in stock prices and the time pace of enterprise AI.”
Manufacturers of data center servers and other back-end equipment are popular on Wall Street this year, as the market is optimistic that they will continue to sell large quantities of devices related to the demand for AI chips and systems in the coming years. Dell has always been one of the best performing individual stocks on the market, with a cumulative increase of more than 300% this year, HPE up about 160%, and NetApp doubling.
Recently, however, market sentiment towards the AI infrastructure sector has changed, partly due to concerns about OpenAI's revenue data and, more broadly, concerns that rising interest rates will create a difficult environment, as much of this construction boom depends on debt.
As a major borrower, Oracle fell 9% on Wednesday, up 33% this year so far; new cloud service provider CoreWeave (CRWV.US) plummeted 15%, erasing all of its 2026 gains.
Barclays analysts said that as far as Dell, HPE, and NetApp are concerned, they have yet to see a “meaningful AI inflection point” in corporate spending and downgraded the ratings of all three companies from “buy” to a level equivalent to “hold.” They believe that revenue growth should be due to a global shortage of memory chips, and point out that infrastructure companies have passed on the higher prices of memory chips to customers.
“There is a growing trend in the market to assume that enterprise adoption of AI will bring about a round of hardware modernization,” Barclays analysts wrote, adding that companies typically invest only 5% of their IT budget into AI. “We believe that the current strong corporate business revenue is more due to the cost of memory chips than the result of companies turning to AI at this stage.”
Barclays analysts also found that only about a quarter of a company's total AI spend goes to hardware. They said that the return to normal and eventual decline in memory chip prices may drag down infrastructure-related revenue.
Memory chips are a well-known industry with a strong cycle. Related individual stocks were hit this week, after China's Changxin Storage announced over the weekend that it had made progress in the new chip structure. Micron (MU.US) fell 11% this week, South Korea's SK Hynix fell 13% in US market trading, and Western Digital (WDC.US) fell more than 8%.