Dell Shares Plunge 11%, Leading Data Center Sector Selloff on Concerns About "Enterprise AI Timing"

Dell shares tumbled 11% on Wednesday, dragging down other data center equipment stocks as the market grew increasingly worried that corporate spending on artificial intelligence cannot justify the scale of AI infrastructure buildout. Hewlett Packard Enterprise, Oracle, and Super Micro also joined the decline.

In a note to clients on Wednesday, Barclays analysts downgraded Dell, Hewlett Packard Enterprise, and NetApp, citing "prior significant rallies and considering enterprise AI timing."

Manufacturers of data center servers and other back-end equipment have been favored on Wall Street this year, driven by optimism that they will sell large volumes of equipment tied to demand for AI chips and systems in the coming years. Dell has been one of the market's best performers, up more than 300% this year, while Hewlett Packard Enterprise gained about 160% and NetApp doubled.

However, sentiment toward the AI infrastructure sector has shifted recently, partly due to concerning revenue data from OpenAI and more broadly due to worries that rising interest rates will create a difficult environment, as so much of the buildout relies on debt.

Heavily indebted borrower Oracle fell 9% on Wednesday and has dropped 33% year to date; new cloud service provider CoreWeave plunged 15%, wiping out all of its 2026 gains.

Barclays analysts said that on the enterprise spending front, they have yet to see a "meaningful AI inflection point" for Dell, Hewlett Packard Enterprise, and NetApp, and therefore downgraded all three from buy to the equivalent of hold.

They instead attributed revenue growth to a global memory shortage and noted that infrastructure companies have passed on memory price increases to customers.

"There is a growing belief that enterprise AI adoption will drive hardware refresh," Barclays analysts wrote, adding that enterprises typically allocate only 5% of their IT budgets to AI.

"We believe strong enterprise revenue is currently more a function of memory costs than an enterprise AI push," Barclays analysts said.

Barclays analysts also found that only about a quarter of total enterprise AI spending flows to hardware. They said that normalization and eventual declines in memory prices could weigh on infrastructure-related revenue.