Why Did Dell Stock Drop 22%?

November 28th, 2025 by Trefis Team
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Trefis
DELL: Dell Technologies logo
DELL
Dell Technologies

Dell Technologies (NYSE:DELL) has shed roughly 22% of its market value over the past month, a sharp reversal for a stock that was previously riding the AI-infrastructure boom. The sell-off has been driven primarily by concerns around profitability. Memory component prices — particularly DRAM and NAND, which are essential for AI-capable servers — have risen substantially this quarter. As Dell’s revenue mix shifts toward hardware-intensive AI servers, these rising component costs directly pressure gross margins.

Another factor weighing on the stock is the uneven demand backdrop across Dell’s business segments. The AI-server pipeline remains strong and continues to expand, but the traditional PC and client-device business is still experiencing soft demand. As long as the PC cycle remains sluggish, Dell’s overall growth story becomes more dependent on its newer, lower-margin server mix. This transition has introduced volatility, with investors unsure how quickly AI-server demand will translate into sustainable, high-margin earnings.

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Despite these headwinds, the long-term narrative for Dell is far from broken. The company is aggressively positioning itself as a central supplier of enterprise AI infrastructure, combining servers, storage, networking, and services into a comprehensive offering. The company might have an opportunity to capture the next wave of corporate AI spending. In fact, the company has upgraded its long-term revenue forecasts due to stronger-than-expected AI-infrastructure demand. The challenge is that this long-term growth story is unfolding at a time when margins are under pressure, and investors are prioritizing near-term execution over future potential.

What’s Next?

The key question now is whether this pullback represents a buying opportunity or if more downside lies ahead. For long-term investors with a multi-year horizon, the recent drop may offer an attractive entry point, especially if memory prices stabilize and Dell successfully monetizes its backlog of AI-ready servers. If the AI-infrastructure cycle continues accelerating, Dell could see a recovery in sentiment as revenue growth converts more cleanly into profit growth. However, for shorter-term investors or those wary of volatility, caution may still be warranted. There is legitimate risk that cost pressures remain elevated over the next quarter or two, potentially keeping margins and the stock under pressure.

At this stage, Dell is best viewed as a high-risk, high-potential-reward setup. The long-term AI thesis remains powerful, but near-term profitability challenges are real and may continue to create turbulence. A staggered entry or a wait-for-clarity approach could make sense depending on risk tolerance, but the current valuation does offer an appealing setup for patient investors who believe in the durability of enterprise AI spending.

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