IBM Stock Plunges as Clients Prioritize Hardware Over Deals

IBM's stock has taken a hit in recent months, with a $10,000 holding now worth around $7,850. This decline follows management's July 22 call, where they attributed the shortfall to clients prioritizing hardware purchases over expected deals.

The company's clients redirected spending toward servers, storage, and memory due to short supply, leading to tens of large deals failing to close on time. Software revenue rose 5% in the quarter, but organic growth was flat, according to management.

IBM's largest segment, software, brought in $30.0 billion in fiscal 2025, accounting for 44% of IBM's revenue that year. Management revised its 2026 forecast for software growth to 6% to 8% following the shortfall.

The stock price has already fallen by 31% from its 52-week high, with a P/E ratio of 19.8 times past year's earnings, lower than IBM's own historic low of 10.5 in the past ten years.