HPE Stock and Dell are Downgraded. no 'Meaningful AI Inflection Yet.'

Dow Jones10-14

Shares of Hewlett Packard Enterprise dropped in premarket trading Wednesday as Wall Street took a cautious view on several information technology stocks that have stretched valuations without a clear revenue boost from artificial intelligence.

Barclays analyst Tim Long downgraded HPE, Dell Technologies, and NetApp to Equal Weight from Overweight. The firm lowered its price target on HPE to $77 down from $83 and reduced its price target on Dell stock to $574 from $603. Long left his NetApp price target unchanged at $219.

HPE stock fell 3.9% to $66.13 in premarket trading on Wednesday after ending Tuesday down 2.2%. Shares have soared 186% this year as of the closing bell on Tuesday. Dell stock, meanwhile, declined 2.5% to $557.60 and NetApp stock dropped 3.6% to $230.37.

Along with HPE, both Dell stock and NetApp have risen sharply this year. Dell stock has surged 355% this year while NetApp shares have gained 123%.

Barclays, however, decided to take a more cautious approach on the information technology hardware stocks with valuations skyrocketing this year as commodity costs have boosted revenue.

Long noted these stocks don't appear to have a "meaningful AI inflection yet" that could produce product adoption, enhanced business performance, and significant revenue growth.

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