Why Did IBM, ORCL, SMR Stocks Drop To 52-Week Lows Today?

• Argus cut its price target on IBM to $280 from $360, saying the company underestimated the impact of rising component costs on customer spending patterns. 
• Oracle shares fell as investors remained concerned about heavy AI infrastructure spending and its weakening credit profile. 
• NuScale Power shares dropped to a 52-week low of $7.52 as investors questioned the long timelines for small modular reactor development. 

IBM (IBM), Oracle (ORCL), and NuScale Power (SMR) stocks dropped to fresh 52-week lows on Thursday amid fresh worries over whether the heavy AI-related investments would deliver sufficient financial returns, highlighting a broader shift in market sentiment, with investors placing greater emphasis on cash flow, margins and execution rather than long-term growth expectations.

Oracle and NuScale Power stocks tumbled 6% and 8% respectively, while IBM stock pared losses to end the session 3% higher. 

AI Spending Shift Deepens IBM's Challenges 

IBM stock reached a new yearly low of $204.44, extending losses after the company acknowledged that it failed to adapt quickly enough to shifting customer demand. IBM’s comment that enterprise customers are prioritizing AI infrastructure investments, delaying or reducing spending on traditional software offerings, has added additional pressure. 

On Thursday, Argus analyst Jim Kelleher reduced his price target on IBM shares to $280 from $360 while reaffirming a ‘Buy’ rating, following IBM's negative pre-announcement for its fiscal second-quarter results, which indicated that key infrastructure revenue would fall short of earlier expectations.

The firm added that while IBM had been monitoring higher component costs, particularly rising memory prices, the company underestimated the extent to which those market dynamics would influence customer buying behavior. 

IBM has declined 26% so far this year, with retail sentiment on Stocktwits remaining in ‘extremely bullish’ territory. 

Oracle Faces Balance Sheet Pressure

Oracle stock tumbled to a fresh 52-week low of $123.66 on investors' concern about the company's aggressive investments in Oracle Cloud Infrastructure, which have resulted in elevated capital expenditures and negative free cash flow. 

Additional pressure came from concerns surrounding leverage and its credit profile, with S&P Global lowering the company’s credit rating to BBB- last week, only one level above non-investment-grade status. The agency highlighted concerns about Oracle’s reliance on large customers, including OpenAI, which represents a large portion of its remaining performance obligations. 

Despite those headwinds, Oracle has introduced financing initiatives, including allowing customers to deploy their own chips within Oracle data centers. The company is also competing for a major secure cloud contract with the Japanese government.

Oracle has cratered 36% year-to-date, with sentiment around the stock remaining in ‘extremely bullish’ territory. 

NuScale Confronts Long Development Timelines

NuScale Power stock dropped to an annual low of $7.52 as investors remained wary of the lengthy regulatory and construction timelines associated with small modular reactors.

On Monday, Truist began its coverage on NuScale with a ‘Hold’ rating and a $10 price target and pointed to growing enthusiasm for nuclear energy while cautioning that successful project delivery will determine which developers ultimately emerge as industry leaders. 

Truist said the nuclear power industry continues to benefit from strengthening customer interest and a supportive policy environment, but companies must now demonstrate they can translate those favorable conditions into completed projects. 

So far this year, NuScale has declined 46% with sentiment around the stock remaining in ‘bearish’ territory. 

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