IBM's 25.2% Plunge: Mainframes, Not AI, to Blame for Loss

On July 14, 2026, IBM's stock price plummeted by 25.2% in a single day on the New York market, closing at $217.07.

This marked the largest single-day drop in the company's 115-year history, exceeding the 23.7% decline recorded during Black Monday in 1987.

The market capitalization lost in this one day was approximately $66.5 billion, which exceeds 10 trillion Japanese yen.

The trigger for this drop was preliminary earnings results released one week ahead of the official quarterly earnings report scheduled for July 22.

Revenue increased by 1% year-over-year, but it was not even a decline in revenue that caused the market to sell off the stock mercilessly.

At the time, IBM's stock price had risen by about 35% in 2025 and was being bought up to near all-time highs.

The closing price the day before the plunge was $290.23, with a recent high of $332.46, representing a level of approximately 23 times expected EPS.

Investors re-evaluated not just the current quarter but the entire future stream of earnings, resulting in a P/E ratio that was slashed to nearly 17 times and a loss of about a quarter of the market capitalization.

The 'End of SaaS' theory, which shook the software industry in the first half of 2026, claimed that AI is indeed killing software companies.

However, by aggregating only publicly available numbers, it became clear that what actually happened was not 'AI killed software,' but rather 'the mainframe product cycle hit a trough, and the core software tied to it fell along with it.'