EXPLAINED: WHY DID IBM CRASH TODAY?!?
In a Nutshell
IBM plunged 25% after missing EPS and revenue estimates, as customers shifted spending to servers, storage, and memory ahead of price hikes—hurting IBM and pressuring software peers like Microsoft and Salesforce. The stock, pumped by Trump comments to $350, has now erased those gains and trades near prior lows amid demand uncertainty and rising competition. The speaker views the drop as a potential dead-cat bounce, not a long-term buy, with the stock failing to meet investment criteria after repeated sharp swings.
These notes were generated by AI and may contain inaccuracies.
IBM lost 25% of its value today, marking its worst or biggest red day in the company's history. The company reported earnings with EPS missing by 2.7% and a surprise miss of 3.7%. Earnings were not terrible, yet the stock reacted with a massive sell-off.
The stock is now trading at the same level it was 2 months ago. IBM had risen from lows of $200 to highs of $350 over a short period, primarily due to positive comments from Trump promoting the company. The stock got ahead of itself and began trading at a big premium.
The CEO disclosed a shift in spending towards servers, storage, and memory late in the quarter as companies rushed to secure supply ahead of expected price increases. This shift moved money into memory or storage companies instead of companies like IBM.
The weakness is spreading across software sectors, negatively impacting Microsoft, Salesforce, ServiceNow, and Workday.
The stock is giving back all recent gains. It was overvalued before receiving a Trump tweet that pumped it to new all-time highs. This was a short-lived positive catalyst.
Using Investing Pro software, fair value analysts indicate 31% upside. The stock trades at a P/E ratio of 19 times earnings. The company produces $68 billion in revenue and $10 billion in net income.
There is uncertainty about actual demand IBM will experience in upcoming quarters due to overinvestment by companies like Micron and SanDisk that are dominating the marketplace. IBM is falling behind, which explains the earlier sell-off from $300 per share at the start of 2026 down to lows of $200 per share.
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