How Long IBM Stock Could Stay Underwater

Beyond the initial plunge, the true risk of a market shock is the long and uncertain wait for a recovery.

International Business Machines (IBM) has seen its stock fall about 22% over the past month, leaving it trading roughly 37% below its 52-week high. For a company at the center of enterprise IT, providing hybrid cloud platforms, AI through its watsonx offerings, and mission-critical mainframe systems, this kind of move gets attention. The market is currently weighing the company’s second quarter performance, which management noted “fell short of expectations,” and a subsequent reduction in full-year revenue growth guidance to a range of 4% to 5%.

This backdrop, which has sparked a debate over whether client demand is merely deferred or facing a more structural shift, makes the downside question urgent. The recent dip is one thing, but it is worth asking how far this stock falls in a true market shock, and whether you have the staying power to ride out a recovery.

A 37% Drop During The 2020 Market Crash

When a broad market shock hits, International Business Machines stock has historically fallen right alongside it. Across the 15 major shocks it has traded through, its peak-to-trough drop averaged 16%, almost identical to the S&P 500’s average 16% decline in those same periods. This is not a stock that typically hides from market turmoil.

At its worst, the stock’s deepest drawdown was a 37% plunge during the 2020 market crash. The company has been hit particularly hard during shocks in the Growth & Demand Scare category. These include the Q4 2018 Fed Policy Error / Growth Scare, the 2015-2016 major currency devaluation / Global Growth Scare, and the 2020 market crash itself.

A Recovery Can Take 108 Months

Surviving the fall is only half the battle; the other is enduring the climb back. Of the market shocks it has fully recovered from, International Business Machines took a median of about 5 months to reclaim its prior high. That’s a significant period to be underwater on a position.

But a median time can mask the outliers. The company’s slowest recovery followed a 2013 market reaction to changing central bank policy, a shock that took about 108 months, nine years, to fully mend. While some past recoveries have been swift, there is no guarantee the next one will be.

Every Major Shock International Business Machines Has Traded Through

Peak-to-trough drawdown in each shock, and how long the stock took to reclaim its pre-shock high. Stock vs. the S&P 500, long-duration bonds, and its sector.

[1] Summer 2007 Credit Crunch: Subprime hedge fund failures froze interbank lending, prompting an emergency Fed rate cut.
[2] 2008-2009 Global Financial Crisis: Lehman’s collapse froze global credit, crashing every asset class and spiking unemployment.
[3] 2010 Eurozone Sovereign Debt Crisis / Flash Crash: Greece’s deficit revelation collapsed European banks and triggered the May Flash Crash.
[4] 2011 US Debt Ceiling Crisis & European Contagion: US credit downgrade and European sovereign stress triggered a broad risk-off selloff.
[5] 2013 Taper Tantrum: Bernanke’s taper hint spiked Treasury yields, triggering emerging market capital flight.
[6] 2014-2016 Oil Price Collapse: OPEC refused to cut output, crashing crude from $100 to $26.
[7] 2015-2016 China Devaluation / Global Growth Scare: Yuan devaluation sparked global recession fears, crushing cyclicals and emerging markets.
[8] 2016-2017 Trump Reflation Bond Selloff: Trump’s election spurred fiscal stimulus hopes, rotating capital from bonds into cyclicals.
[9] Q4 2018 Fed Policy Error / Growth Scare: Powell’s hawkish comments and trade war fears triggered the worst December since 1931.
[10] 2020 COVID-19 Crash: Pandemic lockdowns caused history’s fastest bear market before massive stimulus drove recovery.
[11] 2022 Inflation Shock & Fed Tightening: 9.1% CPI forced aggressive rate hikes, crushing both stocks and bonds simultaneously.
[12] 2023 SVB Regional Banking Crisis: SVB’s rate-driven bond losses triggered a social-media bank run, seized by FDIC.
[13] Summer-Fall 2023 Five Percent Yield Shock: Strong economic data pushed 10-year yields to 5%, compressing yield-sensitive sector valuations.
[14] 2024 Yen Carry Trade Unwind: BOJ rate hike unwound yen carry trades, briefly crashing tech stocks globally.
[15] 2025 US Tariff Shock: 145% China tariffs crashed equities and the dollar on supply chain disruption fears.

A Business Built On Recurring Revenue

The critical question is whether the IBM of today would react the same way. The business has evolved significantly. Software now accounts for nearly 45% of total revenue, and management notes that “About 80% of our annual software revenue is recurring,” which should provide more stability than in the past. Furthermore, the current z17 mainframe is having the “best refresh cycle in reported history,” suggesting strength in its core infrastructure business.

However, the recent earnings shortfall shows the company is not immune to shifting client priorities. Management explained that clients redirected capital spending, causing large deals to slip. This confirms that even with a large recurring revenue base, IBM is still exposed to enterprise spending cycles. The historical drawdown pattern remains a relevant guide to the risk shareholders carry.

A 37% Fall Hits A 10% Position

To make that risk concrete, consider its portfolio impact. The stock’s deepest historical shock-driven drawdown of 37% on a position sized at 10% of a portfolio would have cut about 4% from the whole portfolio. At a 20% position weight, that hit grows to about 7%. Can your portfolio absorb that kind of impact without forcing a panicked sale?

The answer points toward the levers an investor actually controls: disciplined position sizing and diversification. How much of your capital is tied to this single story is the most important risk-management decision you will make.

Which Of Your Other Stocks Could Fall This Hard?

You have just seen, in hard numbers, how far International Business Machines has fallen when markets break, and how long it took to climb back. The natural next question is how much the rest of what you own could fall, and the options market puts a forward number on exactly that: the expected move it prices in for each stock over the year ahead. Our Expected Move screen ranks which S&P 500 names carry the widest priced-in swings, so you can see whether your other holdings are sitting on more downside than you have accounted for.

IBM Has Fallen 37% From A Peak Before

The piece above put a number on how far this stock could fall, and a number like that matters most to whoever holds too much of one name. IBM itself has fallen 37% from a peak within the past five years, and a fall like that lands very differently when one position carries too much of your wealth. Knowing what a repeat would do to your net worth is exactly what the Trefis Wealth team computes, with the same rules-based systematic discipline that runs our High Quality Portfolio. Request a free vulnerability audit of your biggest positions.