Dell Shares Drop as AI Memory Costs Squeeze Margins

A divergence emerged in AI hardware stocks between June 25 and June 26, 2026, as storage suppliers benefited from the same AI demand that pressured server assemblers. Dell Technologies saw its shares fall over 5% in consecutive sessions, continuing a decline triggered by a June 24 downgrade from GF Securities to a Hold rating. The firm faces compressing gross margins, which dropped from 21% to 18% in its last quarter, partly due to a shift toward lower-margin AI servers and rising costs for memory components.

While Dell struggled, suppliers including Western Digital and Micron Technology experienced rallies. Western Digital shares rose 5% following strong demand for hard disk drives in AI data centers. To fund its AI server expansion, Dell recently completed a $3 billion senior unsecured notes offering, though investor confidence was further shaken by company insiders selling over $1.5 billion in shares over three months.

Despite the selloff, financial institutions including Goldman Sachs, Piper Sandler, and Morgan Stanley maintained positive ratings and raised price targets for Dell. The company's volatility follows a massive one-year rally that saw the stock increase approximately 226%.