17% drop in Dell shares in two days; Barclays hesitated to demand enterprise AI
Source link: 17% drop in Dell shares in two days; Barclays doubted the demand for enterprise artificial intelligence. At a glance, Dell shares fell about 7% on Thursday; This decrease after the 11% drop on Wednesday brought the two-day loss to around 17%. Barclays downgraded Dell shares to "equal weight" from "market weight" and raised the price target from $603 to $574. To […] source site: Safir Arjan
At a glance, Dell shares fell by about 7% on Thursday; This decrease after the 11% drop of the day two conflicting signs of artificial intelligence; TSMC's boom and doubts about corporate demand at a glance TSMC announced significant profit growth and very strong demand for artificial intelligence, and Fed Reserve Chairman Warsh said: "We will assess the situation at the October and December meetings". India stopped major purchases of gold ETFs; The market on the eve of the festive season at a glance, big mutual funds such as Kotak, UTI and HDFC have stopped major purchases of gold ETF units; Trump rejected the use of nuclear weapons and sending ground forces to Iran; The attack on Mount Klang is still on the table. At a glance, Donald Trump said that the United States will not use nuclear weapons against Iran, and he will send US ground troops.
Shares of Dell Technologies continued to fall on Thursday and decreased by about 7%; This was while the company's shares fell by 11% on Wednesday. Investors were evaluating the stock downgrade by Barclays; A bank that says Dell's rapid revenue growth is due more to rising memory chip prices than actual increases in companies spending on artificial intelligence.
A drop of about 17% in two days brought the stock price to about $473 by the close of trading on Thursday. This is nearly 20% below the stock's record high in mid-September; A gap that approaches the threshold that many investors use to define a bear market. The bulk of Thursday's decline came early in trading: The stock opened sharply lower, briefly down nearly 11 percent, but recouped some of its losses.
Barclays analyst Tim Long downgraded Dell shares to "equal weight" from "overweight" and raised the price target to $574 from $603. He also downgraded shares of Hewlett Packard Enterprise and NetApp to "equal weight" and made a similar argument about the enterprise hardware sector.
The core of Barclays' assessment is that corporate spending on artificial intelligence has yet to show a significant increase. Long argued that much of the recent strong performance of hardware manufacturers has come from passing on higher memory costs to customers. This trend can increase reported income without increasing actual demand by the same amount. If memory prices return to normal levels or decline, this support could disappear and companies' earnings could come under pressure.
This decline came after a period of significant growth. Even after two days of heavy declines, Dell's stock has nearly quadrupled this year overall, leaving little room for disappointment. The timing of the drop also stands in stark contrast to the company's own message: a day before Barclays' downgrade, CEO Michael Dell said enterprise demand for AI was just getting started, and that demand for AI computing still outstrips supply.
Sales pressure spread to other AI hardware segments as well. Server maker Super Micro Computer and networking group Arista Networks were among the decliners, while losses in the broader technology sector were more limited. This pattern suggests that investors likely saw Barclays' assessment as a warning about one segment of the AI market -- hardware tied to enterprise demand -- rather than a blanket verdict on all AI spending.
It is important to continue the decline of stocks on Thursday. The one-day decline after the downgrade could simply reflect a quick price adjustment, but the heavy losses on the second day suggest investors are reconsidering how much Del's growth will be sustainable.
The next test is Dell's own financial report and forecasts. The data will show whether orders for AI servers have expanded among more enterprise customers, and what share of the company's revenue growth is attributable to higher prices rather than increased sales volume.