IBM’s Two-Speed Recovery: A Quantum Deal Meets a 42% Mainframe Collapse
Published on 07/26/2026 at 06:32 | Redaktion boerse-global.de
IBM’s stock clawed back some ground on Friday, rising 3.74% to €188.38, but the relief feels fragile. Just two days earlier, the shares had touched a 52-week low of €175.14, dragged down by a second-quarter earnings report that laid bare a stark divide inside the company: a booming software and quantum push on one side, and a collapsing mainframe business on the other.
The trigger for the sell-off was a lowered growth forecast. Management now expects 2026 revenue to expand by 4% to 5% in constant currency, down from a prior target of “more than 5%.” The culprit? A 42% plunge in IBM Z mainframe sales, as the current z17 cycle enters its late stage. That hardware slump alone shaved more than five percentage points off the company’s overall growth — far more than executives had anticipated.
Yet even as the market punished the legacy business, IBM was quietly laying the groundwork for its next chapter. On July 23, the same day the stock hit its low, the company signed a binding agreement to acquire HRL Laboratories from Boeing and General Motors. The deal, expected to close by the end of the third quarter, brings silicon-spin-qubit technology into IBM’s quantum roadmap, diversifying its approach beyond superconducting circuits. Boeing and GM have signaled they will continue collaborating with IBM on quantum applications after the transaction closes.
That acquisition builds on the May 2026 launch of Anderon, a quantum wafer foundry, giving IBM a two-pronged strategy toward fault-tolerant quantum systems. For bulls, the timing is deliberate: the company is using a cyclical trough in hardware to accelerate its pivot toward higher-margin, next-generation technology.
Should investors sell immediately? Or is it worth buying IBM?
Bulls See a Floor, Bears See a Structural Shift
Optimists point to several signals that the worst may be over. The relative strength index of 35.5 is flirting with oversold territory, historically a precursor to a technical bounce. The stock now sits just 7.56% above its July low, and the average analyst price target of €231.06 implies upside of 22.7% from Friday’s close. CEO Arvind Krishna added a note of encouragement: roughly 30% of the large deals that failed to close in the second quarter were finalized in the first three weeks of July, suggesting delayed demand rather than lost business.
Supporters also highlight the strength of IBM’s growth engines. Red Hat revenue climbed 11%, while distributed AI infrastructure posted a record 37% jump. The argument is that the current valuation — down 27.52% year-to-date — overlooks these expanding segments entirely.
The bear case, however, rests on a more uncomfortable reading of the data. The mainframe collapse is not just a cyclical dip, skeptics argue; it reflects a broader shift in enterprise IT spending. Customers are reallocating budgets toward scarce AI servers and memory chips from competitors, locking in capacity before expected price hikes. IBM’s consulting business, meanwhile, remained essentially flat in the latest quarter, suggesting the company is losing ground in services as well.
The technical picture reinforces the caution. The stock trades 19.44% below its 200-day moving average of €233.84 and 17.61% below the 50-day average. The annualized 30-day volatility of nearly 85% signals a market on edge. Some institutional investors have already voted with their feet: Unisphere Establishment cut its IBM stake by 13.1% in the first quarter, while the Bank of Nova Scotia reduced its position by 29.2%.
The Waiting Game
For now, the stock appears caught between competing forces. The support at €175.14 could anchor a consolidation phase, with a potential recovery toward the 100-day average near €217.41. But if the shares fail to hold above €190, a retest of the July lows becomes a live risk — particularly if enterprise software sentiment remains dampened by AI hardware spending.
IBM at a turning point? This analysis reveals what investors need to know now.
The next major catalyst is the closing of the HRL acquisition, expected by the end of the third quarter. Until then, the market will be watching whether software growth can accelerate enough to offset the mainframe drag. Income-focused investors have a date on the calendar: August 10, 2026, the ex-dividend date for the quarterly payout of $1.69 per share.
The fundamental question — whether IBM can decouple its valuation from its legacy hardware cycles — remains unanswered. The quantum bet is bold, but its commercial payoff is years away. In the meantime, the company must prove that the delayed deals of the second quarter were truly delayed, not lost.
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IBM Stock: New Analysis - 26 July
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