Is IBM Underperforming the Technology Sector?

Valued at a market cap of $214.4 billion, International Business Machines Corporation (IBM) is a global technology and consulting company based in Armonk, New York. It provides enterprise-focused solutions across hybrid cloud infrastructure, artificial intelligence, software, and IT consulting services.

Companies valued at $200 billion or more are typically classified as “mega-cap stocks,” and IBM fits the label perfectly, with its market cap exceeding this threshold, underscoring its size, influence, and dominance within the information technology services industry. The company’s key strengths lie in its deep enterprise relationships, strong recurring revenue base, and leadership in hybrid cloud and AI solutions. It benefits from long-standing contracts with governments and large corporations, providing stable cash flows.

This tech giant has dipped 26.9% from its 52-week high of $324.90, reached on Nov. 12, 2025. Shares of IBM have declined 22% over the past three months, considerably lagging behind the State Street Technology Select Sector SPDR ETF’s (XLK) 2% rise during the same time frame.

Moreover, on a YTD basis, shares of IBM are down 19.8%, compared to XLK’s slight drop. In the longer term, IBM has decreased 7.8% over the past 52 weeks, notably underperforming XLK’s 25.2% uptick over the same time frame.

To confirm its bearish trend, IBM has been trading below its 200-day moving average since mid-February and has remained below its 50-day moving average since early February.

IBM’s shares plummeted 13.2% on Feb. 23, following a disruptive announcement from AI startup Anthropic. The sell-off was triggered by the launch of Claude Code, a specialized AI tool designed to automate the modernization of COBOL, the legacy programming language that underpins the world’s financial infrastructure and runs primarily on IBM mainframes. Investors panicked over the tool’s potential to dismantle IBM’s expertise in mainframe consulting, as Anthropic claimed it could compress multi-year, consultant-heavy migration projects into just a few months.

IBM has outpaced its rival, Accenture plc (ACN), which dropped 47.2% over the past 52 weeks and 28.6% on a YTD basis.

Despite IBM’s recent underperformance, analysts remain moderately optimistic about its prospects. The stock has a consensus rating of “Moderate Buy” from the 22 analysts covering it, and the mean price target of $320.38 suggests a 34.9% premium to its current price levels.

On the date of publication, Neharika Jain did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com