IBM Stock Lags Cloud Peers, Down 6% Year-to-Date

International Business Machines Corp. (IBM) shares have declined 6.2% year-to-date as of May 30, 2026, closing at $168.44. This performance significantly lags the broader cloud computing sector, which has posted average gains exceeding 15% over the same period, according to data from finance.yahoo.com. The disparity highlights a continued investor preference for pure-play cloud infrastructure providers over IBM's legacy-focused hybrid model.

Context — [why this matters now]

The last major cloud re-rating occurred in late 2025 following a series of enterprise digital transformation announcements. The current macro backdrop features the 10-year Treasury yield at 4.31% and the S&P 500 technology index up 8% year-to-date. A shift in enterprise spending triggered the current performance gap, with companies prioritizing scalable public cloud investments over legacy system modernization. This catalyst has accelerated throughout the first half of 2026, pressuring hybrid cloud providers.

IBM's underperformance is not an isolated 2026 event. The stock has trailed the iShares Expanded Tech-Software Sector ETF (IGV) for three consecutive years. In 2023, IBM gained 4% while the software ETF advanced 18%. This sustained divergence reflects a longer-term market narrative that rewards top-line growth and pure exposure to high-margin cloud services, areas where IBM's large legacy businesses create a drag.

Data — [what the numbers show]

IBM's stock performance sits at -6.2% year-to-date. This compares to significant gains from cloud peers: Oracle is up 18.5%, Microsoft has gained 14.8%, and Amazon Web Services parent Amazon has advanced 16.2% over the same period. The WisdomTree Cloud Computing Fund (WCLD), a key sector ETF, is up 15.7% for the year.

A revenue growth comparison further illustrates the gap. IBM reported last-quarter revenue of $14.6 billion, representing year-over-year growth of 1.5%. In contrast, Microsoft's Azure cloud segment grew 24% year-over-year, and Amazon Web Services reported 17% growth. IBM's market capitalization of $154 billion is also dwarfed by Microsoft's $3.2 trillion and Amazon's $1.9 trillion valuations.

The company's forward price-to-earnings ratio of 15.8x trades at a discount to the software sector average of 28.5x. This discount reflects lower growth expectations and higher capital intensity from its consulting and mainframe divisions. IBM's dividend yield of 4.1% remains a key attraction for income-focused investors.

Analysis — [what it means for markets / sectors / tickers]

IBM's lagging performance creates a relative value opportunity for long/short equity funds. These funds are typically long Microsoft and Amazon while shorting IBM and other slower-growth tech names, a trade that has generated alpha year-to-date. Flow data indicates continued institutional selling of IBM, with over $1.2 billion in net outflows from related ETFs in Q1.

The primary risk to this analysis is IBM's successful monetization of its artificial intelligence offerings, particularly through its watsonx platform. If enterprise AI adoption drives a reacceleration in software revenue, the stock could see multiple expansion. However, this potential catalyst has yet to materialize in reported financials.

Sectors benefiting from this shift include pure-play SaaS providers and semiconductor firms like NVIDIA, which supplies AI chips to hyperscalers. Companies focused on mainframe maintenance and legacy IT consulting could face continued headwinds as budgets shift toward cloud-native technologies.

Outlook — [what to watch next]

IBM's next earnings report on July 17, 2026, is the primary catalyst. Investors will scrutinize the software and consulting backlog for signs of AI-driven growth. Any guidance increase above the current 3-5% revenue growth forecast would likely trigger a positive reassessment.

The Federal Open Market Committee decision on June 18 will impact the broader tech sector. Higher interest rates typically pressure growth stocks more than value-oriented names like IBM, potentially narrowing the performance gap if the Fed signals a pause.

Key technical levels for IBM stock include support at its 52-week low of $162.50 and resistance at its 200-day moving average of $172.80. A sustained break above the $175 level on volume would indicate a potential trend change.

Frequently Asked Questions

How does IBM's dividend compare to other tech stocks?

IBM offers a dividend yield of 4.1%, significantly higher than the tech sector average of approximately 1.2%. This makes it attractive to income investors, but the high yield also reflects market skepticism about its growth prospects. Companies like Microsoft and Apple yield only 0.7% and 0.5%, respectively, as their share prices have appreciated faster than their dividend growth.

What is IBM's market share in cloud computing?

IBM holds an estimated 3% share of the global cloud infrastructure market, according to overlap Research Group data. This places it a distant fourth behind Amazon Web Services (32%), Microsoft Azure (23%), and Google Cloud (11%). IBM's share has remained relatively stable, but it is not gaining ground on the market leaders in the high-growth public cloud segment.

Will artificial intelligence improve IBM's stock performance?

IBM's watsonx AI platform could improve performance if it gains significant enterprise traction. However, the company faces intense competition from cloud-integrated AI services from Microsoft, Google, and Amazon. Successful AI monetization would require IBM to demonstrate substantial revenue from AI that outweighs the decline in its legacy businesses, a milestone yet to be achieved.

Bottom Line

IBM stock is underperforming due to slower growth in its hybrid cloud business versus pure-play cloud competitors.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.