IBM is worth only about $200 billion*.
On July 14, 2026, its stock plunged 25% after a profit warning. While the market was looking for $17.9 billion in revenue and $3.01 in EPS for Q2, the company now expects only $17.2 billion and $2.93. The main culprit: the infrastructure business, whose revenues would fall by 7% year over year.
IBM acknowledges that mainframes did not deliver the expected commercial results. It attributes this mainly to the reallocation of budgets toward hardware (servers, storage, memory) in anticipation of price increases driven by the AI race. The phenomenon, which showed up in the last weeks of June, had been anticipated. But not its magnitude. In this context, “many mainframe deals were not closed within the expected timelines.”
A first stock storm with COBOL modernization
IBM suspects cybersecurity to be another reason for customer distraction during the quarter. Its narrative, however, contrasts with the view voiced at the end of January during the annual results presentation. For fiscal 2025, revenue had grown by 8%. Infrastructure activity had risen by 12%, helped by the z17 generation launched at least in June.
During this year, the group has experienced another AI-driven stock rout. It occurred on February 23. The trigger: a post by Anthropic about COBOL modernization with Claude Code. He had to argue that the real work was not translating the code, but system engineering: redesign of data architecture, replacement of the runtime, maintaining the integrity of transaction processing, etc.
Alongside IBM, other software stocks were hit on July 14. Among them, Microsoft (-3%), Salesforce (-6%), and Workday (-10%).
* IBM was still valued at more than $300 billion in early July, after two weeks of a clear rally sparked by the announcement of its sub-1 nm technology.
