IBM cratered roughly 25% in a single session, marking the worst day on record for Big Blue, after a pre-announcement revealed a $700 million revenue miss and adjusted earnings per share of $2.93 versus $3.01. Management warned that customers are redirecting spending toward AI servers, memory, and hardware while delaying software purchases, rattling markets already on edge from geopolitical tensions and shifting Federal Reserve policy. The plunge, discussed on Episode 810 of DH Unplugged, underscored a disconnect as competitors Dell and Hewlett Packard Enterprise rose 7% and nearly 5%, respectively, on the same session, highlighting a rotation away from legacy tech.
The sell-off unfolded amid a blockbuster start to bank earnings season. JPMorgan reported $21 billion in net revenue with an 86% jump in equities, Bank of America posted $9.1 billion in net income, Goldman Sachs delivered $6.6 billion profit and $20.98 EPS, and Citigroup saw net income rise 45%. The strong bank results provided a counterpoint to IBM's struggles, but hosts John C. Dvorak and Andrew Horowitz on DH Unplugged cautioned that the broader market may be masking underlying weakness. Horowitz described the phenomenon as "cradling," where algorithmic rotation props up indices even as individual stocks get hammered.
On the AI front, the hosts examined Odysseus: The Fall, a fully AI-generated 135-minute feature directed by Ash Kusha and produced by FountainO for mid-five figures, launching alongside Christopher Nolan's $250 million Odyssey starring Matt Damon. The juxtaposition highlighted the disruptive potential of AI in entertainment, while Apple's lawsuit against OpenAI over alleged trade-secret theft involving former hardware chief Tang Tan and Chang Liu underscored the intensifying competition for talent, with more than 400 ex-Apple employees now at OpenAI.
Other notable events included SK Hynix's $26.5 billion NASDAQ ADR listing, oversubscribed seven times, and President Trump's walk-back on a 20% Strait of Hormuz reimbursement fee, which sent oil pushing toward $80. A cyclosporiasis outbreak across 30 states added to the sense of unease. Horowitz shared an anecdote from a weekend gathering with commercial real estate developers and plumbers who described stalled projects and frozen loan draws, drawing a parallel to the 2007-2008 letters-of-credit squeeze. The hosts also discussed stock picks Amazon and Micron, both long.
