IBM shares plunge 25%, wiping $400 million from employee 401(k) accounts

Becky Robertson Wed, July 15, 2026 at 9:27 AM PDT | 4 min read

While the SpaceX IPO turned thousands of current and former employees into millionaires, not every staff shareholder story has the same happy ending. Workers at another tech giant are now facing collective losses of an appalling $400 million because of their company's struggles.

IBM (IBM:NYSE) may be one of the most established names in the technology sector, but that doesn't make it immune to market fluctuations. Its decades-long legacy as an enterprise software giant may have indirectly contributed to its stock price plummeting by 25% on July 14 — marking the worst share day in its history.

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The AI Components Crisis

With companies rushing to scale AI capabilities amid a components crisis, clients have shifted budgets into chips and associated data center hardware to a level that CEO Arvind Krishna said his team "did not anticipate."

In an early second-quarter earnings announcement, IBM reported $12.3 billion in revenue — $660 million less than projected — leading to adjusted earnings per share falling 8 cents below expectations.

The stock tumbled more than $73 as a result, spelling disaster for the approximately 150,000 employees who hold company shares in their 401(k) plans.

$400 Million in Losses

The losses amount to some $400 million total. While this is not a substantial portion of the $59 billion the IBM 401(k) plan is estimated to be worth, it remains significant. It also highlights the dangers of over-investing in any single entity.

Experts speaking to MarketWatch on Tuesday warned against letting "corporate loyalty cloud financial judgement" and emphasized the importance of diversifying, no matter how confident you may be in any one investment position.

Defensive investing and ensuring true diversification — meaning no more than 25% in any given sector and a maximum of 5% in any given position — are essential.

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The Market Is Excessively Punishing Non-AI Stocks

The instant and devastating impact of IBM's earnings posting on its stock price reflects a larger recent phenomenon that Mad Money host Jim Cramer called out earlier this year.

Cramer decried the stock market's tendency to excessively "punish" firms that cannot match the outsized momentum (real or perceived) of the AI boom when it comes to forecasts or posted earnings.

Speaking about the fact that we are in "a market that despises anything not connected to tech and the data center," Cramer said investors are now "unsafe at any level."

"We keep hearing this drumbeat that 2026 is 1999 all over again, but the difference between now and 1999 is that this market does not stop punishing the companies that disappointed … You are unsafe at any level," he said in May.

Though IBM is in the business of tech, it is somewhat of an old-era stock compared to its new-era AI counterparts, who are the sole drivers of recent market momentum.