IBM’s historic crash exposes a deeper tech divide: Chart of the Day
Jared Blikre
Wed, July 15, 2026 at 3:30 PM GMT+5:30
2 min read
Rising memory prices have been feeding chip profits for months. IBM just showed who may be paying the bill
IBM (IBM) plunged 25% Tuesday, its worst day since at least 1968 after customers rushed to secure hardware before expected price increases — a sign the AI build-out is reshuffling technology budgets and pulling chip stocks away from software
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The damage spread across software, where 3 in 5 stocks fell, led down by Atlassian (TEAM), ServiceNow (NOW), and Adobe (ADBE). Cybersecurity was the exception, with CrowdStrike (CRWD), Zscaler (ZS), Palo Alto Networks (PANW), and Fortinet (FTNT) all rallying
IBM’s preliminary update showed <a href="https://todaytrendnews7.com/stellantis-to-announce-second-quarter-2026-financial-results-on-july-30/" title="Stellantis to Announce Second Quarter 2026 Financial Results on July 30″>second quarter revenue of $17.2 billion, roughly $660 million short of Wall Street’s $17.9 billion estimate. Adjusted earnings of $2.93 per share also missed the $3.03 consensus
CEO Arvind Krishna’s letter to investors offered the more revealing explanation
In the final weeks of June, customers redirected quarterly capital spending toward servers, storage, and memory to lock down supply before expected price increases, Krishna wrote
IBM underestimated the size of that shift, then failed to adjust quickly enough as large deals slipped past quarter-end
Hardware costs were only part of the pressure
“Clients were distracted with rapidly-evolving, industry-wide cybersecurity concerns in the quarter,” Krishna wrote
That tracks with a market where cybersecurity stocks have held up better than the broader software group. Security spending is harder to postpone. Other projects have more flexibility
IBM’s quarter puts a company-specific face on a larger change. Software and chip stocks are no longer moving in anything close to lockstep
The 52-week correlation between the iShares Expanded Tech-Software Sector ETF (IGV) and iShares Semiconductor ETF (SOXX) has fallen to 0.17, the lowest in data going back to 2002
Correlation simply measures how closely two investments move together. A reading near 1 means they tend to rise and fall together. A reading near zero means their moves have little in common
The long-term average for IGV and SOXX is 0.76. Today’s reading says investors are treating them as increasingly different businesses
That distinction has widened as chip profits surge and the AI infrastructure build-out absorbs more money. Software has staged rebounds, but its comeback has repeatedly lost momentum
For investors, the divergence means “tech” is becoming a less useful label. Chips can rally on scarcity and infrastructure spending while software sinks under tighter customer budgets. This leaves broad technology funds exposed to two very different trades
