An analyst sees limited room for Dell and HPE shares to continue climbing, as dynamics could shift within the market for memory components

Dell's stock had its worst day in about a year and a half.

Shares of Dell Technologies and Hewlett Packard Enterprise have been major winners this year, but one analyst is questioning whether there's much room left for them to rally.

Both Dell (DELL), whose stock is up more than 300% so far in 2026, and HPE (HPE), whose stock is ahead 163%, sell artificial-intelligence servers and command booming backlogs amid soaring demand. But Barclays analyst Tim Long wonders if those stock gains are tied to AI in quite the way that investors think.

While Dell "is fairly aligned with the AI trade," he attributed most of its stellar stock performance to its ability to offset memory prices.

The company has benefited from the AI boom through its data-center servers that are optimized for AI, and Long is modeling for this business to triple to $75 billion in the current fiscal year, which ends in January.

However, Long said memory prices will likely normalize and could even start to decline over the next two years, leading to a slowdown in the growth rate of Dell's revenue from AI servers. That in turn could limit the stock's ability to move higher, he added.

Long moved to a neutral rating from overweight on Dell's stock, and he lowered his price target to $574 from $603. Dell shares were down 11.4% at the market close Wednesday to $507.43, a move that ranked second to last within the S&P 500 SPX.

Dell's stock posted its worst single-day percentage drop since it lost 19% on April 3, 2025, according to Dow Jones Market Data.

HPE's server and storage business has also benefited from higher average selling prices for memory components, Long said, so he expects less upside going forward for the stock as those costs normalize. He cut his rating on HPE's stock to neutral from overweight as well.

Long said he doesn't yet "see a meaningful AI inflection" for either company. He had been expecting enterprise adoption of AI to drive demand for more hardware to support the technology, and to therefore lead to higher revenues. Instead, he said memory costs have so far been more of a driver for enterprise-related revenue than the transition to AI.

-Britney Nguyen