Barclays (BCS.US) bearish on Dell (DELL.US): No inflection point in AI spending, memory costs are the main reason

According to Woofun AI, Barclays (BCS.US) has downgraded Dell Technologies (DELL.US) from ‘Overweight’ to ‘Neutral’, prompting its stock price to fall by 11.27% in a single day. This move directly challenges the optimistic signals previously conveyed to CNBC by Michael Dell, making the opposition between the two sides regarding AI infrastructure demand public. Barclays (BCS.US) believes the current market has not seen a substantial inflection point in enterprise AI spending, but is instead being distorted by short-term supply chain factors that make growth seem stronger than it is.

Delving into Barclays’ (BCS.US) bearish logic, the core lies in a reassessment of revenue drivers. On October 14, analyst Tim Long simultaneously downgraded Hewlett Packard Enterprise (HPE.US) and NetApp (NTAP.US), pointing out that the growth of these three companies stemmed not from an explosion of AI applications, but was constrained by a global memory shortage.

According to data compiled by Woofun AI, companies typically allocate only 5% of their IT budgets to artificial intelligence, and hardware accounts for just a quarter of total AI spending. In his report, Long emphasized that strong revenue has been more a result of elevated memory costs, and once memory prices normalize and decline, related infrastructure revenue will come under pressure. As a result, Barclays (BCS.US) lowered the target price for Dell Technologies (DELL.US) from $603 to $574, which is still about 13% higher than the October 14 closing price of $507.93.

At the same time, Hewlett Packard Enterprise (HPE.US)’s target price was reduced from $83 to $77, which still leaves about 22% upside relative to the closing price of $63.11.

In the face of such institutional caution, Dell (DELL.US) management continues to maintain a robust narrative on the demand side. Despite the company’s stock price having surged by 303.5% since 2026, and currently trading nearly 14% below its all-time closing high of $588.40 set on September 17, Michael Dell still denies that a bubble exists. In a CNBC interview on October 13, he stated that demand in the AI computing field remains greater than supply, and that undersupply is the norm. He observed that large-scale AI usage, previously limited to frontier labs and select enterprises, is now spreading across broader business sectors; but this is just the beginning, and vast amounts of infrastructure investment will be deployed in the future.

This supply-demand imbalance forms the core argument behind his dismissal of bubble concerns.

The market’s focus has now shifted to the upcoming third quarter earnings verification. Whether Barclays (BCS.US)’s forecast or the CEO’s assessment proves more accurate will depend on the actual financial disclosures. Dell Technologies (DELL.US) estimates quarterly revenue will reach $49 billion, an 81% increase year-over-year.

If this astonishing growth rate is realized, it will strongly support management’s view of continually expanding demand; conversely, if growth disappoints, it could confirm Barclays (BCS.US)’s concerns that revenue is being driven by memory costs rather than an explosion in AI applications.