Dell shares fell after Barclays downgraded the stock over concerns about enterprise AI spending. The company's recent results still show strong AI demand, but investors are focused on profitability.
Dell Technologies shares plunged 11.4% on Wednesday after Barclays downgraded the stock. The sell-off extended across AI infrastructure stocks as hotter-than-expected U.S. inflation data heightened concerns about borrowing costs.
Barclays questions the pace of AI spending
Barclays analyst Tim Long lowered Dell's rating from Overweight to Equal Weight and cut the price target to $574 from $603. The move reflected concerns that enterprise AI spending may not be accelerating quickly enough to support further gains in hardware stocks.
The analyst also highlighted rising memory prices as a factor in hardware revenue. Higher component costs can lift reported sales, but they do not necessarily indicate stronger demand for server units or improved profitability.
Record backlog supports demand
Even so, Dell's latest results show substantial demand. The company reported $47 billion in revenue for its second quarter of fiscal 2027, up 58% year over year, while its Infrastructure Solutions Group generated $31.8 billion, an 89% annual increase.
Dell also reported $60.9 billion in AI orders, $16.4 billion in AI-optimized server revenue and a record $95 billion AI backlog. It raised its full-year fiscal 2027 revenue outlook to $192 billion.
However, backlog growth alone does not guarantee higher profits. Delivery timelines, component costs, pricing pressure and customer spending plans will determine how much of that demand turns into earnings and cash flow.
Technical picture after the drop
Dell shares fell 11.27% to $507.93, close to the lower boundary of a rising parallel channel that has guided the rally since midyear. The $460–$465 area is a potential downside reference if the channel breaks, while a recovery above $530–$545 could signal improving momentum.
The relative strength index has turned lower but does not appear deeply oversold, which leaves room for further weakness.
Source: Coinpedia Fintech News
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