What’s Really Driving Dell’s Boom? Barclays Has a Different Answer

Dell Technologies stock fell 11.27% on October 14 after Barclays cut the server maker to Equal Weight from Overweight. The bank said enterprise spending on AI has not reached a meaningful turning point.

The downgrade landed a day after Michael Dell told CNBC that enterprise AI adoption is just beginning. 

Barclays Credits Memory Prices for the Enterprise Boom

Barclays analyst Tim Long applied the same downgrade to Hewlett Packard Enterprise (HPE) and NetApp. CNBC reported the analysts have not seen a meaningful AI inflection in enterprise spending at all 3 companies.

The bank turned more guarded on hardware names it described as “more aligned with enterprise spending.” Long tied 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 put just 5% of IT budgets toward AI. Hardware accounts for roughly a quarter of enterprise AI spending.

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

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

Even after the drop, Dell remains up about 303.5% so far in 2026. The stock now trades nearly 14% below its record close of $588.40 on September 17.

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Michael Dell Says the Enterprise Wave Is Just Starting

Michael Dell offered a more upbeat reading of enterprise demand a day before the downgrade. In a CNBC interview on October 13, he said demand for AI computing still exceeds 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 AI bubble fears, arguing there is not enough supply for one to form.

Dell’s third-quarter results should show whether Barclays or its CEO has the better read. The company has guided for revenue of $49 billion, up 81% year over year.

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