IT Hardware Market Slows in 2026, Dell Technologies (DELL) Maintains AI Server Strength

Dell Technologies Inc. (NYSE:DELL) is included in our list of the best AI data center stocks to buy now.

In a January 20 report, Reuters said that a “perfect storm” of slowing enterprise demand, rising component costs, and elevated valuations is expected into 2026, especially after Morgan Stanley downgraded the U.S. IT hardware sector to cautious. According to the firm’s survey, hardware budgets are growing at just 1% year-over-year in 2026, the weakest non-COVID reading in roughly 15 years. Meanwhile, a separate reseller survey suggested that 30%-60% of customers could cut planned PC, server, and storage purchases if price hikes persist. Despite AI-related demand continuing to be a structural tailwind, Dell Technologies Inc. (NYSE:DELL) shares declined along with peers as worries about softer corporate spending, tariff-related uncertainty, and the possibility of downward earnings revisions grew.

Furthermore, Barclays’ company-specific optimism contrasts with caution. On January 15, 2026, the company maintained its $148 price target while upgrading Dell Technologies Inc. (NYSE:DELL) from Equal Weight to Overweight. Barclays underscored substantial upgrade potential across Dell’s installed base by indicating strength in AI server orders, steady AI operating margins, disciplined opex management, and recovery in enterprise server and storage markets.

Dell Technologies Inc. (NYSE:DELL) develops and sells enterprise IT solutions, including servers, storage, networking, and PCs, to support enterprise, cloud, and AI workloads globally through integrated hardware, software, and services platforms.

While we acknowledge the potential of DELL as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.