Is the AI hardware myth cooling off? Dell Technologies, Inc. Class C (DELL.US) plunges 11%, Barclays downgrades the three server giants in a triple blow.

Note that Dell Technologies, Inc. Class C (DELL.US) plunged 11% on Wednesday, dragging down other data center equipment stocks, amid growing market concerns that corporate spending on artificial intelligence (AI) will not be enough to sustain this AI buildout boom. Hewlett Packard Enterprise Co. (HPE.US), Oracle Corporation (ORCL.US), and Super Micro (SMCI.US) also fell. Barclays analysts downgraded Dell Technologies, Inc. Class C, Hewlett Packard Enterprise Co., and NetApp (NTAP.US) in a note to clients on Wednesday, citing "after significant share price appreciation, as well as enterprise AI timing issues." Data center server and other back-end equipment makers have been Wall Street favorites this year, on optimistic expectations that they will continue to sell large volumes of equipment tied to AI chip and system demand in the years ahead. Dell Technologies, Inc. Class C has been one of the market's best-performing stocks, up more than 300% year to date, while Hewlett Packard Enterprise Co. has risen about 160% and NetApp has doubled. However, sentiment toward the AI infrastructure sector has shifted recently, partly due to worrying revenue figures from OpenAI and, more broadly, concerns that rising interest rates will create a difficult environment, since a large portion of this buildout boom relies on debt. As a major borrower, Oracle Corporation fell 9% on Wednesday and is down 33% year to date; neocloud provider CoreWeave (CRWV.US) plunged 15%, wiping out all of its 2026 gains. Barclays analysts said that for Dell Technologies, Inc. Class C, Hewlett Packard Enterprise Co., and NetApp, they have yet to see a "meaningful AI inflection point" in enterprise spending, and downgraded all three from "buy" to the equivalent of "hold." They believe revenue growth should be attributed to the global memory chip shortage, and noted that infrastructure companies have passed on higher memory chip prices to customers. "The market is increasingly inclined to believe that enterprise AI adoption will bring about a hardware refresh cycle," the Barclays analysts wrote, adding that enterprises typically allocate only 5% of their IT budgets to AI. "We believe the current strong enterprise business revenue is more due to memory chip costs than the result of enterprises shifting to AI at this stage." Barclays analysts also found that only about a quarter of total enterprise AI spending goes to hardware. They said that memory chip prices returning to normal and eventually declining could weigh on infrastructure-related revenue. Memory chips are a notoriously cyclical industry, and related stocks were hit this week after China's ChangXin Memory Technologies announced progress on a new chip structure over the weekend. Micron (MU.US) fell 11% this week, South Korea's SK Hynix dropped 13% in U.S. market trading, and Western Digital Corporation (WDC.US) fell more than 8%.