International Business Machines Corp. (New York Stock Exchange symbol: IBM) The stock market lost more than $55 billion on Tuesday, receiving its first sell rating in three months from a top Wall Street analyst.
Stephen Percy, decorated analyst at HSBC Holdings PLC ADR (NYSE: HSforC), downgraded IBM’s stock to a “sell” rating on July 14. Percy cut his 12-month price target on IBM shares to $191 from $231, suggesting a downside risk of about 14.4%.
“The analyst was negative on IBM due to its high valuation compared to peers and lower expected EPS growth, resulting in a ‘Reduce’ rating,” the note to clients said. male.
HSBC bank analyst said that IBM stock The valuation has become stretched, trading at 22 times its estimated calendar year 2027 non-GAAP (non-GAAP) price-to-earnings (P/E) ratio, well above the sector average of 16.9 times. The company also expects the company’s non-GAAP earnings (EPS) to grow at a compound annual growth rate (CAGR) of 10.7% between calendar years 2026 and 2028, well below the industry average of 19.2%.
As such, Percy expects IBM shares to face selling pressure over the next 12 months.
IBM stock price forecast
Earlier today, Eric Woodring, a senior Wall Street analyst at Morgan Stanley (NYSE: Ms), a Hold rating has been assigned to IBM stock. However, Woodring raised his 12-month price target on IBM stock to $293 from $267.
Meanwhile, Param Singh, an analyst at Oppenheimer, reiterated a buy rating on IBM shares on Tuesday. Additionally, Singh raised his 12-month price target to $350 from $320, suggesting a potential upside of 56.7%.
As such, 18 Wall Street analysts Surveyed by TipRanks We have assigned an average rating of Moderate Buy to IBM stock. As such, these analysts see the company’s shares rising to an average of $303.83 over the next 12 months.
IBM stock forecast
Amid bearish sentiment from Percy, IBM’s stock price has fallen more than 26% in five days, trading at roughly $221.81 at press time. The capitulation over the past 24 hours was exaggerated after the company reported weaker-than-expected earnings due to weakness in its software and infrastructure businesses, according to preliminary financials for the second quarter of 2026. results.
Today’s big sell-off in IBM shares comes amid growing expectations that the AI stock market will collapse, as Feinbold did I mentioned. Expectations of the 2026 AI bubble bursting have been strengthened after the Federal Reserve indicated that the AI boom has fueled inflation.
As such, HSBC’s 12-month forecast for International Business Machines shares could be met in the event of a crash in the AI stock market, and vice versa.
