IBM shares plunge 25% in worst single-day drop, wiping $400M from employee 401(k) accounts

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

• IBM +3.72%
• SPCX -3.08%

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 estimated $400 million due to their company's struggles.

IBM (IBM:NYSE) may be one of the most established names in the technology sector, but that does not 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 single trading day in its history.

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AI Spending Shift Catches IBM Off Guard

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

In an early second-quarter earnings announcement, IBM reported $12.3 billion in revenue, which was $660 million less than projected. Adjusted earnings per share fell 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.

The total losses amount to roughly $400 million. While that is not a substantial portion of the $59 billion IBM 401(k) plan is estimated to be worth, it remains significant — and 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 diversification, no matter how confident one may be in any given investment.

Defensive investing and ensuring true diversification — holding at most 25% in any given sector and a maximum of 5% in any single position, among other guidelines — are essential.

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The Market Is Excessively Punishing Non-AI Stocks

The instant and devastating impact of IBM's earnings report on its stock price reflects a broader trend 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.

Noting that the market "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 technology business, it is considered an older-era stock compared to its newer AI-focused counterparts.