Dell shares fell 11% on 14 October after Barclays downgraded Dell, Hewlett Packard Enterprise and NetApp, questioning whether enterprise AI spending would justify the gains that had taken Dell stock up more than 300% in 2026, CNBC reported.
Key points
- Barclays cut all three stocks to Equal Weight from Overweight.
- Its analysts attributed much of the suppliers’ revenue growth to higher memory costs rather than enterprise AI purchases.
- Barclays cut its Dell price target to $574 from $603 and its HPE target to $77 from $83.
- Oracle fell 9% and CoreWeave fell 15% in the same session.
Barclays cuts Dell target to $574
Barclays analyst Tim Long lowered the three ratings to Equal Weight from Overweight, Seeking Alpha reported. He reduced Dell’s price target to $574 from $603 and HPE’s to $77 from $83, while keeping NetApp’s at $219.
Seeking Alpha’s market data put Dell’s decline on 14 October at 11.27%, HPE’s at 8.28% and NetApp’s at 7.03%. CNBC reported that Oracle lost 9% and CoreWeave 15% that day. The selling extended beyond the three companies whose ratings Barclays changed.
The downgrades followed large gains in the suppliers’ shares. Dell’s 2026 gain stood at more than 300%, HPE’s at about 160%, while NetApp had doubled. Investors.com gave the 2026 gains heading into 14 October as nearly 350% for Dell, 186% for HPE and 123% for NetApp.
Using a different period, Yahoo Finance put Dell’s gain over the past year at approximately 273%, HPE’s at about 177% and NetApp’s at around 101%. Yahoo Finance reported that Barclays’ revised Dell target offered 0.3% upside from the previous close, compared with 11.9% for HPE. It put NetApp’s unchanged target 8.4% below that stock’s previous close.
Memory costs complicate Dell’s growth outlook
Barclays analysts said they had not seen a “meaningful AI inflection” in enterprise spending for Dell, HPE and NetApp, according to CNBC. They attributed stronger revenue in part to a global memory shortage, with infrastructure suppliers passing higher component prices to customers. “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.
Barclays found that roughly a quarter of total enterprise AI spending goes towards hardware. Its analysts said businesses typically devote 5% of their IT budgets to AI. They also said that memory prices returning to normal levels, and eventually falling, could put pressure on infrastructure-related revenue.
Long’s assessment of Dell distinguished sales growth from the prices charged for its products. Dell’s guidance called for just over 100% revenue growth in enterprise servers, with growth in the mid-teens for storage and its CSG business in FY27, Seeking Alpha reported. Long expected most of that growth to come from higher average selling prices used to offset memory inflation. He forecast a substantial slowdown in growth over the following two years as memory prices normalised and potentially declined.
Long also told clients that companies appeared to favour paying cloud providers for AI technology on a consumption basis before buying infrastructure themselves, Investors.com reported. That purchasing pattern leaves server and storage suppliers dependent on the timing of customers’ own equipment orders.
HPE results and NetApp cloud sales
HPE had reported a 34% increase in sales to $12.2 billion for the quarter ended 31 July, above analysts’ $12 billion expectation, Investors.com reported. Adjusted earnings rose 152% to $1.11 a share, against an estimate of 93 cents. Its cloud and AI revenue, which includes AI servers, increased 25% to $9 billion, compared with an estimate of $8.73 billion.
Long described HPE’s networking strength as broad-based and said its AI outlook had improved, according to Seeking Alpha. He nevertheless judged the improved mix to be reflected in the stock’s valuation. For NetApp, he pointed to cloud revenue growth of about 20% and a gross margin of 85% in that business, which accounted for 10% of total sales. Long expected storage-industry gains tied to NAND pricing in the second half of 2026, followed by normalisation the next year.
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