Barclays Downgrades Dell and HPE to Neutral, Citing No Meaningful AI Inflection

On October 14, Barclays downgraded Dell and HPE to "neutral" from "overweight," saying that valuations have run too far and commodity costs have boosted revenue, but the bank has yet to see a meaningful AI inflection point.

The downgrades came as AI infrastructure stocks came under broad pressure. CoreWeave plunged about 15%, Nebius fell around 15.1%, Oracle dropped 7.2%, and Dell and HPE declined about 10.3% and 6.4%, respectively. CoreWeave's bonds also fell into distressed territory, adding to concerns about the economics of highly leveraged data center buildouts.

Barclays' cautious view highlights growing investor scrutiny over when AI-related revenue will materialize and whether cash flow can cover rising interest and capital spending. The same session saw U.S. consumer price data come in above expectations, fueling further worries about higher-for-longer interest rates.

Dell and HPE had seen revenue lifted by commodity costs, but Barclays said a material AI inflection point has not yet emerged.