IBM (NYSE: IBM | IBM Price Prediction), once the beacon of America’s tech world, stumbled again after earnings showed it barely compares with industry giants on AI revenue. Its stock tumbled 7% after it released less-than-mediocre earnings. They will bring the stock down by 20% in 2026, while the S&P 500 is up 3%.
While earnings were slightly ahead of guidance, its revenue growth shows it cannot keep pace with most megatech companies. Revenue rose 9% to $15.9 billion from the year-ago quarter. EPS was up to $1.12 from $1.08. Revenue guidance for 2026 remained at 5% growth.
By way of contrast, the much larger Microsoft (NASDAQ: MSFT) had a 17% increase in its most recent quarter to $81.3 billion. The huge software company’s EPS hit $5.18 compared to $3.24 in the year-ago period. Microsoft’s net income of $38.5 billion for the period is 2.3 times IBM’s revenue for its most recent quarter.
Amazon (NASDAQ: AMZN), Apple (NASDAQ: AAPL), and Alphabet (NASDAQ: GOOG) all have higher revenue than Microsoft’s, and Nvidia’s (NASDAQ: NVDA) is almost as high. It is another sign of how small and inconsequential IBM’s revenue is compared to that of the larger tech companies.
Aside from earnings, IBM has been hurt by the impression that a portion of its revenue could be taken away by advanced technology from larger AI-centric corporations.
IBM is special, in a way. The company lost whatever clout it had decades ago. In 1980, IBM ranked ninth on the Fortune 500, America’s largest companies based on revenue. Since then, it has missed the opportunity to lead in personal computers, PC operating systems, e-commerce, tech operating systems, search, and, more recently, AI. It is hard to find a tech company that lost that many chances to be a leader.
IBM’s market cap is just over $200 billion. Microsoft’s market cap is $3.2 trillion. Alphabet’s is $4.1 trillion. Privately held OpenAI is estimated at $850 billion.
IBM has lost ground for decades, and it can’t make any of that up.
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