IBM Stock Leads Mega-Cap Stock Decliners as Market Volatility Triggers Steep Selloff. That Doesn’t Tell You the Whole Story.

Valued at a market capitalization of roughly $209 billion, IBM (IBM) is among the worst-performing mega-cap stocks in 2026. The tech stock has shed almost 25% year-to-date (YTD), making it the biggest laggard among large-cap names.

For a company that just reported one of its strongest quarters in years, that disconnect is worth understanding before you do anything with your money. Let's take a closer look.

More News from Barchart

• NVDA Earnings Bull Put Spread has a High Probability of Success

• This High-Yield REIT Just Hiked Its Dividend By 7.1%. Its Shares Look Compelling Here.

• Warren Buffett’s Berkshire Hathaway Dumped 16 Stocks in Q1, But the Chevron Sale Was the Largest

• Tired of missing midday reversals? The FREE Barchart Brief newsletter keeps you in the know. Sign up now!

IBM Stock Is Down Despite a Stellar Q1

According to reports, IBM ranks last among mega-cap stocks by YTD performance. Other notable laggards so far this year include Palantir Technologies (PLTR), Wells Fargo (WFC), and Microsoft (MSFT).

In Q1 2026, IBM grew revenue 6% year-over-year (YOY) on a constant currency basis to $15.9 billion. Free cash flow (FCF) rose 13% to $2.2 billion, marking the company’s highest Q1 FCF in over a decade. Software sales climbed 8% YOY to $7.1 billion, while the data segment grew by 16%. Interestingly, the mainframe business also posted a 48% revenue gain.

CEO Arvind Krishna said on the earnings call that the company is "off to a strong start" and remains confident in full-year constant currency revenue growth of 5% or more, plus roughly $1 billion in FCF growth for the year.

Shares of IBM had a very strong run coming into 2026, but when the broader market turned volatile, expensive stocks with stretched multiples got hit hardest. The selloff is less about what IBM is doing wrong and more about what the market is repricing across the board.

IBM Enjoys an AI Moat

IBM is embedding artificial intelligence (AI) across its entire portfolio. Its mainframe platform can now run AI inferences directly on transaction data in real time, something that was not possible before. Financial services clients are using this to catch fraud on 100% of transactions rather than using a small sample to assess risk, which IBM says is saving some clients millions of dollars.

The consulting business is seeing its backlog fill up with generative AI work, which now accounts for about 30% of total backlog. IBM's internal AI tool for software development, called Bob, is delivering 45% productivity gains across its developer workforce.