IBM Stock Slumps as Enterprise Spending Pulls Back

IBM's underperformance has been evident over the past year, with its shares declining 7.5% compared to the S&P 500 Index's 21.5% gain.

In contrast, the State Street Technology Select Sector SPDR ETF (XLK) has gained about 40.9% over the same period, outperforming IBM by a significant margin.

The underperformance is attributed to a late-June pullback in enterprise spending due to supply constraints and clients prioritizing securing AI infrastructure.

Despite this, management stresses that demand remains intact, pointing to a $500 million infrastructure backlog as evidence of pending revenue.