- IBM stock shed 12.2% last week, while shares of peer Cognizant declined 13.7%.
- Investors were seen rotating money out of technology stocks amid rising Treasury yields and renewed valuation concerns.
- Stocktwits sentiment for IBM notched up to the ‘bullish’ zone over the past week.
International Business Machines Corp. (IBM) shares tumbled 12.2% last week to a five-month low, marking their steepest weekly decline in nearly six years.
Despite an upbeat earnings report from IBM late last month and largely positive results from most tech heavyweights, technology stocks have slid sharply as rising Treasury yields and renewed valuation concerns triggered broad profit-taking across growth names.
Tech Selloff
The tech-heavy Nasdaq 100 declined 2.1% – its fifth straight week of losses – while the S&P 500 shed 1.4%. IBM peer Cognizant’s stock (CTSH) dropped 16.7% in the week, becoming the top loser on Nasdaq.
IBM, which recently agreed to acquire cloud company Confluent in an $11 billion deal, reported last quarter sales that topped estimates and said its AI business was growing at a fast clip. The company also forecast 2026 revenue above analysts’ projections, prompting a string of price target hikes.
The rally following the January 28 report proved short-lived, with the stock retreating sharply and slipping below its pre-earnings level. Several technology names, particularly the software firms, suffered pressure. Workday and Intuit declined 11.4% and 10%, respectively, over the week, while Intel shares declined 7.5%.
Retail’s Upbeat
In the backdrop of strong results, IBM’s stock drop is being viewed as a buying opportunity, retail data from Stocktwits showed. The sentiment gradually climbed through the week, to ‘bullish’ as of late Monday.
“Long-term, IBM remains one of the clearest structural beneficiaries as enterprises move from pilots to production AI,” said a user. “Short-term pain is real, but levels like this have historically been generational buying opportunities.”
Another trader flagged a $2 million call option trade, and speculated that a rebound was imminent.
Analysts Divided
Not all think like that though. Jim Chanos, the founder of Kynikos Associates, who shot to fame after predicting Enron's collapse, recently said that artificial intelligence is a threat and not an opportunity for International Business Machines Corp.
Analysts are divided as well. Eleven out of the 21 analysts covering IBM recommend ‘Buy’ or higher, seven recommend ‘Hold,’ and three advise ‘Sell’ or lower, according to Koyfin. Their average price target of $324.95 implies a 24% upside to the stock’s last close.
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