Barclays Cuts Dell to Equal Weight After Stock's 300% Surge

what happened

Barclays has moved its recommendation on Dell Technologies down to Equal Weight, from Overweight previously, as GuruFocus reports. The bank's analyst, Tim Long, has reduced the target from $603 to $574. The reasoning is that the shares have surged more than 300% this year, while the S&P 500 has gained about 14%, so further upside may be constrained.

Barclays projects that revenue from Dell's AI server unit will roughly triple to around $75 billion in the fiscal year underway, with operating margins holding near 5%. Long thinks sales could beat his estimate and hit $100 billion in fiscal 2028, but he expects growth to slow over the next two years, leaving less room for large earnings surprises.

The cost ratio has also fallen, dropping from 15.6% during fiscal 2024 to a projected 8% by fiscal 2027. Long still sees room for earnings forecasts to rise, though smaller upgrades would give shares less support going forward.

why it matters

Dell's rally has been supported by pricing that offsets higher memory costs, so the downgrade puts the spotlight on whether broader enterprise AI demand can arrive fast enough to justify further gains.

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