The Zhitong Finance app noted that Dell (DELL.US) shares plunged 11% on Wednesday, dragging down other data center equipment stocks, as market concerns grow that corporate spending on artificial intelligence (AI) may not be sufficient to sustain this AI boom.
Construction boom.
HPE.US, ORCL.US, and SMCI.US also declined.
Barclays analysts downgraded their ratings on Dell, HPE, and NetApp (NTAP.US) in a report to clients on Wednesday, citing "significant stock price increases following and corporate
The timing issue of AI.
Data center servers and other backend equipment manufacturers have been highly favored on Wall Street this year, as the market optimistically expects sustained high sales of AI-related products over the coming years.
Devices related to chip and system requirements. Dell has been one of the best-performing stocks in the market, up over 300% year-to-date; Hewlett Packard has risen approximately 160%, and NetApp has doubled.
However, market sentiment toward the AI infrastructure sector has recently shifted, partly due to OpenAI.
The revenue data is concerning, and more broadly, there is worry that rising interest rates will create a difficult environment, as much of this construction boom has relied heavily on debt.
As a major borrower, Oracle fell 9% on Wednesday, down since the beginning of the year.
33%; New cloud service provider CoreWeave (CRWV.US) plunged 15%, erasing all of its gains since 2026.
Barclays analysts said that, for Dell, HPE, and NetApp, they have not yet seen "meaningful AI" enterprise spending.
The turning point, and they downgraded the ratings for all three companies from "Buy" to the equivalent of "Hold." They noted that revenue growth should be attributed to the global shortage of memory chips and pointed out that infrastructure companies have passed on the higher prices of memory chips to their customers.
"The market is increasingly believing that corporate adoption of AI will trigger a wave of hardware upgrades," wrote Barclays analysts, adding that companies typically allocate only 5% of their IT budgets to
AI. "We believe that the current strong revenue from enterprise business is primarily driven by storage chip costs, rather than enterprises shifting toward AI at this stage."
Barclays analysts also found that only about a quarter of corporate AI spending goes toward hardware. They noted that a return to normal—and eventually lower—prices for memory chips could weigh on infrastructure-related revenue.
Memory chips are notoriously a cyclical industry, and related stocks were hit this week after China’s CXMT announced over the weekend that it had made progress on a new chip architecture. Micron (MU.US) fell 11% this week, while South Korea’s SK Hynix declined in U.S. trading.
13%, Western Digital (WDC.US) fell more than 8%.