IBM (IBM 0.59%) is one of my largest holdings. I've owned it for around a decade, buying into the turnaround before it actually happened, correctly believing that this company, which is more than a century old, would be able to reinvent itself again. But the stock's big pullback in 2026 has me watching it very closely as March gets underway.
What does IBM do?
IBM is a business-to-business technology company that has a material focus on services. It provides the knowledge and human resources to help companies set up and maintain their cloud computing systems, and it helps customers integrate all of that with artificial intelligence (AI). It also makes mainframes, large computers that typically run crucial parts of a customer's business.
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What's important to me is that this is not what the company has always done. In fact, IBM started out making things like scales and has, over the years, transitioned to keep pace with the needs of its business customers and the broader technology sector. I wouldn't exactly call it a chameleon, but it has certainly proved that it has what it takes to change. Many companies lack that capability.
That said, 2026 has not had a good start for the stock. The shares trade down more than 20% from their 52-week highs, which basically means they are in their own personal bear market. And it's not the only material decline that has occurred over the past 12 months.
What's going on, and is it a long-term issue?
The concern among investors right now is that the business will be disrupted by AI. The big drop came after AI company Anthropic announced that it could help modernize COBOL, an older programming language still used by many large companies. IBM is a leader in supporting and modernizing COBOL-based systems.
NYSE: IBM
Key Data Points
Heading into March, I am asking myself how big a deal Anthropic's announcement is. My first reaction is that AI is a tool that IBM will leverage to better serve its business customers.
It seems unlikely that any company will blindly ask AI to update vital systems without human oversight. So it seems more likely that IBM will use AI tools than be replaced by them.
My second reaction is that the company will adjust as needed, as it has many times before. For example, it is already working on next-generation technology such as quantum computing. If IBM's COBOL-related business is hit, it will simply shift resources to areas with greater long-term opportunity.
I'm not overly worried
So I'm watching IBM, but my long-term investment thesis remains the same, and I'm not overly worried about the current pullback in the stock. Wall Street is being driven by news, and mercurial investors are increasingly nervous about tech stocks like IBM. In fact, I believe that this sell-off, if it were to get bad enough, could turn into a new buying opportunity for what might just be one of the tech industry's best companies.
