International Business Machines (IBM) shares continued their sharp descent this week, pressured by mounting evidence that artificial intelligence is disrupting the IT consulting industry and by a broader slowdown in enterprise software spending. The slide persisted even after the company announced a suite of new security and database tools for its IBM Z mainframe platform.
The decline accelerated on June 18 after rival Accenture reported disappointing quarterly results and slashed its revenue growth forecast, triggering a 17% single-day crash in its own stock and sending shockwaves through the consulting sector. Accenture now projects revenue growth of just 3% to 4%, down from an earlier 3%–5% range, and guided annual revenue between $17.75 billion and $18.4 billion, below analyst expectations of $18.47 billion. The news reinforced fears that AI-driven automation is eroding the traditional consulting model, as companies increasingly turn to AI tools to cut costs rather than hiring external consultants.
IBM, which derives a significant portion of its business from IT consulting, saw its stock tumble 26% from its monthly high, dropping to $245.8 on June 18. The company’s own consulting unit grew only 4% in its latest quarter, highlighting its vulnerability to the same headwinds. Coupled with a stalled software sector—where companies like Atlassian, Adobe, and Workday have struggled amid the so-called “SaaS Apocalypse”—IBM’s growth prospects have dimmed, and analysts expect just 5.83% revenue growth this year, decelerating to 4.4% in the following year.
The downward momentum continued on Thursday, with shares falling another 5.05% to close at $249.10, after trading as high as $262 earlier in the session. The drop came despite IBM’s general availability announcement of three new IBM Z software products: IBM zSecure Detection for ransomware monitoring, IBM zSecure Secret Manager for automated certificate management, and IBM Z Database Assistant, an agentic AI tool for database administration. While these tools strengthen IBM’s security and hybrid cloud story, the market largely shrugged off the news, suggesting that near-term growth worries and a lofty valuation—a forward P/E of 25, higher than Nvidia’s 21 and Micron’s 17—are outweighing product innovation.
Technical indicators also paint a bearish picture. IBM stock has formed a down-gap, fallen below its 50-day and 100-day exponential moving averages, and generated a bearish crossover on the Percentage Price Index. Analysts see a potential further drop toward last month’s low of $212, though dip-buying could trigger a short-term rebound. For now, the company faces a tough road as AI reshapes the consulting landscape and investors rethink the value of traditional enterprise IT providers.
