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.
The stock is technically in an oversold range and at a previous support range. A dead cat bounce is possible, but breaking support and spiraling lower is also possible. The stock was forming lower highs and lower lows before the Trump administration pumped the stock.
While it could be viewed as an oversold reversal, it does not meet criteria for long-term investment based on price performance. The preference is against investments that crash 30-40%, run up 60%, then crash again.
The Nasdaq is trading in the same range from lows of 700 to highs of 740 with no break of pattern yet.
Iran announced its full withdrawal from the MOU due to US violations and stated it will not meet the US to negotiate. Trump responded that if Iran does not meet at the negotiating table, the US will start to attack their power plants and bridges. These statements were shared on Truth Social.
Lucid was reported to be filing for bankruptcy, causing the stock to sell off 47%. The stock has since recovered 90% and is now only down 17% on the day. The initial negative news appears to have been false, leading to margin calls and liquidations for those affected.
Semiconductor stocks are pushing higher. Sandisk is up 1.87% during overnight hours. Micron is up 1.97% at $1,000 per share. Live trading sessions occur daily at market open.
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