IBM stock failed to mount a comeback on Wednesday as investors reeled from the previous session's brutal selloff.

After rising in premarket trading, shares reversed course after the opening bell, falling 1.7% to $213.34. The benchmark S&P 500 traded flat.

The stock was only extending losses following Tuesday's plunge, when shares fell 25% to mark their most severe single-day drop on record.

The drop came after IBM issued preliminary second-quarter earnings that missed analysts' targets. Of greater concern to investors, however, was CEO Arvind Krishna's observation that customers were front-loading memory and server purchases to get ahead of anticipated price hikes.

"While we anticipated some supply chain related impact in our expectations, we did not anticipate the magnitude of the capex reprioritization," Krishna said in a letter to shareholders. In the face of these sudden changes, the company failed to "adapt and move quickly enough," he added.

The stock's two-day losing streak has wiped out more than $72 billion in market capitalization, according to Dow Jones Market Data. IBM lost $69 billion in market value on Tuesday, marking the worst single-day drop in the company's history.

Although IBM's troubles continued on Wednesday, software stocks that took a beating in the previous session were rebounding. Accenture, Adobe, and Workday rose 2.6%, 1.5%, and 2%, respectively. The major exception was ServiceNow, which traded slightly lower.

Tuesday's selloff made software stocks look a lot cheaper. IBM is now fetching just 18-times expected earnings, more than 50% below its five-year average.

UBS analyst David Vogt cut his earnings per share and revenue estimates for IBM on Tuesday but stuck by his $236 price target, adding that 18-times earnings looked like a fair valuation for shares.

"While the market reaction was probably stronger than warranted, Krishna's advance warning shouldn't be ignored," said Ashish Nadkarni, an analyst at tech intelligence platform IDC.

"It is worth watching subsequent quarters to understand if buyer trends continue to negatively affect IBM's core business," he added.

Other commentary was more negative. Oppenheimer downgraded IBM shares to Perform from Outperform on Wednesday and withdrew its $350 price target.

The firm previously had expected "no surprises" in IBM'a second-quarter report. Following the earnings warning, however, analysts believe that "the bull thesis will take longer to materialize."

The firm is doubting IBM's ability to deliver double-digit software revenue growth in constant currency through 2027. To get there, the company must buy its way to growth with major acquisitions, or quickly close big-ticket deals that weren't completed on time in the second quarter, analysts wrote.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com and George Glover at george.glover@dowjones.com

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July 15, 2026 13:59 ET (17:59 GMT)

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