IBM: The AI Software Selloff Has Dragged IBM Down 26% From
International Business Machines (NYSE: IBM) has been caught in the crossfire of the AI-driven software sector selloff, falling 6.3% in the past week alone and trading at $240.21 — a full 26% below its 52-week high of $324.90. The stock has broken below both its 50-day moving average ($288) and 200-day moving average ($280), a technical breakdown that has rattled momentum investors. But here's the thing Wall Street is getting wrong: IBM isn't a software startup that can be disrupted by a chatbot. It runs the core transaction processing systems for the world's largest banks, airlines, and government agencies. Its mainframes process 87% of global credit card transactions. Its enterprise software — including Red Hat, watsonx AI, and z/OS — is so deeply embedded in regulated industries that ripping it out would cost clients more than IBM's entire market capitalisation. The most recent quarter underscores the disconnect. IBM posted Q4 2025 revenue of $19.7 billion with a 61.6% gross margin — the highest in the company's modern history. Full-year 2025 revenue came in at approximately $67.5 billion, with diluted EPS of $11.13. At $224.5 billion in market cap and 21.6x trailing earnings, IBM is now cheaper than the S&P 500 average — an unusual situation for a company generating this level of free cash flow.