International Business Machines Corporation (IBM) Survived One AI Scare in February. This One Might Be Different. Fatima Gulzar Sun, July 26, 2026 at 1:46 AM PDT 5 min read IBM NVDA International Business Machines Corporation (NYSE: IBM )'s stock dropped 25% on July 14. That's the worst single day for the stock since records began in 1968, even worse than its previous record drop on October 19, 1987. By the end of the week, IBM's total value was just under $200 billion. The drop happened because IBM warned that its second-quarter results would come in weak. The firm said it earned $2.93 per share on $17.2 billion in revenue. Wall Street had expected $3.01 per share and $17.86 billion in revenue, according to FactSet. CEO Arvind Krishna explained why in a letter to investors. In late June, he said companies started spending their money on servers, storage, and memory chips instead of IBM's usual products. They wanted to buy AI hardware before prices went up. He said IBM expected some of this but not this much. Several big deals also didn't close in time. Krishna also told CNBC that Anthropic's Mythos AI model is making some companies pause their cybersecurity spending while they figure out what they actually need, and that pause is holding up some IBM deals too. But Krishna was clear on one point: "We don't see our software being disrupted by AI at all." This isn't IBM's first AI scare this year, and Krishna is saying the same thing he said last time. Back in February, Anthropic released a tool that rewrites old computer code called Cobol. Investors worried this would hurt IBM's older software business, and the stock had its worst day in 25 years at that point. Krishna said investors were overreacting. He turned out to be right, and by June the stock had bounced back to new highs. Now the stock has fallen even further, and Krishna is again telling investors not to worry. That raises a real question. Is the market overreacting again like it did in February? Or has it finally caught onto a real problem that Krishna still would not admit to? International Business Machines Corporation (IBM) Survived One AI Scare in February. This One Might Be Different. BULL CASE Here's the case for buying International Business Machines Corporation (NYSE:IBM). The quarter right before this one was actually strong. Software sales grew 11% to $7.05 billion, and IBM beat expectations on both earnings and revenue. This doesn't look like a company that was already falling apart. Krishna's story also makes some sense: deals that get delayed aren't the same as deals that disappear forever. Traders in the options market seem unsure which way this will go too, not convinced IBM is doomed. Right after the crash, the cost of betting on big price swings in IBM stock hit one of its highest levels ever, even higher than during past market scares like the 2022 interest rate shock. That tells us traders...
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