IBM Faces AI Threat, Not Opportunity, Says Short Seller Who Predicted Enron’s Collapse

• He flagged the company’s India-centric body shop model and recent software acquisitions.
• Chanos noted that IBM’s greatest innovations in the 21st century have been in financial engineering, adding that the company was a leader in AI until fifteen years ago. 
• In its latest quarterly report, IBM posted a 12% growth in revenue, beating Wall Street’s estimates.

Jim Chanos, the founder of Kynikos Associates, who shot to fame after predicting Enron's collapse, flagged that artificial intelligence is a threat and not an opportunity for International Business Machines Corp. (IBM).

In a post and subsequent comments on X, the short seller said that IBM is essentially a marketing and consulting company, not a cutting-edge AI company.

“Are investors finally beginning to connect the AI-risk dots at $IBM…?!” Chanos posted, flagging the company’s “India-centric body shop model” and recent software acquisitions. He added that the company is still trading at a premium to other hyperscalers.

Shares of IBM ended Thursday’s trading session about 4.8% lower amid a broader tech rout. The stock has also been weighed down after its spin-off, Kyndryl Holdings, launched a review of its accounting practices and the exit of its top financial and legal executives.

Chanos Highlights IBM’s Model

Chanos noted that IBM’s greatest innovations in the 21st century have been in financial engineering, also adding that the company was a leader in AI until fifteen years ago.

He highlighted IBM Watson, the company’s suite of AI-powered enterprise services and tools developed between 2004 and 2011, which has now been rebranded under the WatsonX portfolio. “IBM is a marketing company, not a technology leader,” Chanos emphasized again in an X comment on Thursday.

Chanos went on to highlight how software continues to get a revenue boost from acquisitions, “which no one deducts from the $IBM FCF definition.”

Earnings Results

The short seller’s comments come a few weeks after the software giant reported strong fourth-quarter (Q4) 2025 results that topped street expectations.

CEO Arvind Krishna touted IBM’s generative AI, saying that the book of business stands at over $12.5 billion, adding that AI customers are shifting from experimenting to scaling.

IBM posted a 12% growth in revenue to $19.7 billion, beating Wall Street’s estimates of $19.23 billion and also reported a beat in its adjusted earnings to $4.52 per share compared with $4.32 expectations.

The strong results were bolstered by IBM’s software unit performance, which includes its AI, automation, data offerings. Revenue for the unit climbed 14% to $9 billion.

How Did Stocktwits Users React?

On Stocktwits, retail sentiment around IBM shares remained in the ‘bullish’ territory over the past 24 hours amid ‘high’ message volumes.

IBM shares have gained 1.45% in the past year.

For updates and corrections, email newsroom[at]stocktwits[dot]com.

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