Barclays analysts report that the growth cycle for data center electrical equipment suppliers is peaking. The bank identifies Siemens Energy AG, ABB Ltd., and Schneider Electric SE as companies facing potential margin pressure as AI labs seek to reduce costs.
The report highlights that market consolidation among large buyers gives them increased leverage during contract negotiations. This shift marks a transition from a period of rapid expansion to a more competitive environment for infrastructure vendors.
A separate analysis from October 15 focused on server vendors, including Dell, HPE, and NetApp. Barclays suggests that revenue growth for these firms was largely driven by inflation in DRAM and HBM memory component prices rather than sustained demand for AI services.
According to the bank, AI-related spending accounts for approximately 5% of corporate IT budgets, with hardware representing about one-quarter of that share. This limited adoption rate suggests constraints on future hardware demand.
Market reaction to these reports was significant. Following the downgrade of Dell from Overweight to Equal Weight, its shares fell nearly 11% to $507.93. Oracle shares declined 9%, and the combined market value of affected companies dropped by an estimated $80 billion.
