Barclays Downgrades Dell to Neutral Despite 259% Rally and Doubled AI Server Revenue

Barclays downgraded Dell Technologies (DELL) to Neutral from Overweight, cutting its price target to $574 from $603, citing valuation concerns and growth sustainability risks even as the stock has surged 259% this year. Dell shares fell more than 11% on October 14 to close at $507.93. The downgrade follows Dell's fiscal 2027 second-quarter results, which showed revenue of $46.97 billion, up 58% year over year and above the roughly $45 billion consensus. Adjusted earnings per share came in at $7.04 versus $2.32 a year earlier. Infrastructure Solutions Group revenue hit a record $31.8 billion, up 89%, with AI-optimized server revenue at $16.4 billion, roughly doubling year over year. Dell raised its full-year revenue outlook by $25 billion to $192 billion and disclosed a record $95 billion in AI server backlog. Analyst Tim Long warned that a substantial portion of growth stems from memory price increases lifting average selling prices rather than underlying demand. Barclays expects memory prices to normalize or decline over the next two years, which could slow revenue growth and pressure margins.