IBM Stock Has Its Worst Year Since 2002

IBM shares fell nearly 22% in 2026, the company’s worst start since 2002. Among large-cap tech stocks, IBM is one of the biggest underperformers. The stock fell another 2.5% to $231.25. Ongoing AI disruption concerns are weighing on enterprise software valuations.

Citi Research has initiated coverage of IBM with a Buy rating and a $285 price target, about 23% above the current price. This contrarian view highlights IBM’s history of adapting to major tech changes and its strong presence in enterprise IT.

The main argument for buying IBM is simple but strong: the company has survived and adapted through every major shift in computing over the past century, from early accounting machines and punch cards to personal computers and IT consulting. This history of reinvention demonstrates the ability to adapt, which the analyst believes is important for the current shift to AI. Similarly, IBM’s software and hardware power the core systems of many of the world’s largest companies, including databases, development tools, and a range of computing environments. This deep integration makes it hard for customers to switch, even when competitors offer alternatives.

The risk of AI disruption that has hurt IBM’s stock this year may be exaggerated relative to the company’s actual competitive position. IBM’s strong consulting relationships with major companies could help it connect AI-focused tech providers with large organizations. This could turn a possible threat into a business opportunity. IBM also spends less on capital investments than big cloud providers. This could mean its free cash flow is better than the current stock price suggests, especially as analysts expect profits to improve.

IBM’s work in quantum computing offers a long-term opportunity for investors, as the technology remains in the early stages of commercial adoption. However, real technical progress over the past year has made the chance of profiting from it more realistic. Looking ahead, IBM plans to launch its most powerful quantum system yet in 2029. Its strong reputation and ties with the public sector provide a solid foundation for bringing the technology to market as development continues.

IBM’s stock is at its lowest point in more than 20 years, making it a classic case of a value-versus-disruption investment. Analysts are becoming more positive, as IBM’s strong position with large companies and its clear role in the AI transition support its outlook. The market may be overestimating the risk that IBM will become outdated.