New York, Feb 3, 2026, 2:16 PM ET — Regular session
- IBM shares tumbled roughly 9% in afternoon trading, making them one of the largest weights dragging down the Dow.
- The drop reflects a widespread retreat in software and cloud stocks as investors rethink AI leaders and their valuations.
- Traders are zeroing in on mega-cap earnings due later this week, with IBM’s upcoming quarterly report also on their radar.
Shares of International Business Machines fell roughly 9%, hitting $286.41 in afternoon trading Tuesday. The stock started near $312 but dropped to a low of $284. Around 7.1 million shares traded hands.
The decline accelerated as software and cloud stocks sold off sharply, with investors jittery over how quickly new AI models might upend established firms. “We’ve got an expensive market and expectations are really high. Many areas, especially around AI, are priced for perfection,” said John Campbell, senior portfolio manager at Allspring Global Investments. Traders were also focused on a House vote expected later Tuesday to end the latest federal shutdown, which has pushed back key economic data. (Reuters)
IBM’s drop hit the Dow particularly hard because it’s a price-weighted index, where pricier stocks push the average more than cheaper ones. MarketWatch pegged the combined drag from IBM and Salesforce at about 285 points during the move. (MarketWatch)
The move also trimmed gains after IBM’s late-January results sparked a strong rally. Following several days of climbing, Tuesday’s sharp selloff hit suddenly, casting doubt over the previous momentum.
IBM reported last week that software and infrastructure saw double-digit growth, with its “generative AI book of business” — the running total of AI-related deals — topping $12.5 billion. “We enter 2026 with momentum and in a position of strength,” said Arvind Krishna. The company expects revenue growth north of 5% in constant currency, excluding foreign-exchange effects, along with about $1 billion more in free cash flow after capital expenditures. IBM also announced a quarterly dividend of $1.68 per share, payable March 10 to shareholders of record Feb. 10. (IBM Newsroom)
Still, the earnings snapshot revealed some weak spots. Reuters noted IBM anticipates roughly $600 million in dilution by 2026, mainly from stock-based compensation and interest tied to its planned Confluent acquisition. Growth at Red Hat also slowed in the December quarter. CFO James Kavanaugh pointed out that about 15% of IBM’s hybrid cloud bookings come from the federal government—a potential risk if shutdowns drag on. (Reuters)
Tuesday’s selloff hit more than just IBM. Several major enterprise-tech stocks came under pressure as the tape turned jittery, prompting investors to cut back rather than hold out for clearer signals.
The day could still veer off course. A swift bounce in risk appetite might lure buyers back into IBM following a sharp 9% drop, but a prolonged halt or jitters around corporate IT spending would keep attention fixed on bookings, deal timelines, and pricing power.
The next major market catalyst comes from mega-caps that typically shape cloud spending sentiment: Alphabet reports on Wednesday, followed by Amazon on Thursday. (Kiplinger)
IBM’s next major investor event is its Q1 2026 earnings report, tentatively set for April 22. Investors will be looking closely for updates on software growth, Red Hat’s performance, and cash flow following Tuesday’s reset. (Ibm)
