As International Business Machines Corp. (NYSE: IBM) stock market lost over $55 billion on Tuesday, it has received the first sell rating in three months from a top Wall Street analyst.
Stephen Bersey, a decorated analyst at HSBC Holdings PLC ADR (NYSE: HSBC), downgraded IBM stock to a ‘Sell’ rating on July 14. Bersey reduced his 12-month price target for IBM shares to $191 from $231, thereby signaling a downside risk of about 14.4%.
“The analyst is negative on IBM due to its high valuation relative to peers and lower projected EPS growth, leading to a ‘Reduce’ rating,” the note to clients noted.
HSBC’s analyst argued that IBM stock valuation has become stretched, as it trades at 22 times its estimated calendar year 2027 non-Generally Accepted Accounting Principles (non-GAAP) price-to-earnings (P/E) ratio, well above the sector median of 16.9 times. The firm also expects the company’s non-GAAP earnings per share (EPS) to grow at a compound annual growth rate (CAGR) of 10.7% between calendar years 2026 and 2028, significantly below the sector median of 19.2%.
As such, Bersey expects IBM stock to experience selling pressure over the next 12 months.
IBM stock price forecast
Earlier in the day, Erik Woodring, a top Wall Street analyst at Morgan Stanley (NYSE: MS), assigned a hold rating for IBM stock. Nonetheless, Woodring raised his 12-month price target for IBM stock to $293 from $267.
Meanwhile, Param Singh, an analyst at Oppenheimer, reiterated a Buy rating for IBM shares on Tuesday. Additionally, Singh raised his 12-month price target to $350 from $320, signaling a potential 56.7% upside.
As such, 18 Wall Street analysts surveyed by TipRanks have set an average rating of Moderate Buy for IBM stock. As such, these analysts see the company’s shares surging to an average of $303.83 over the next 12 months.
IBM shares outlook
Amid the bearish sentiment from Bersey, IBM’s share price plunged over 26% in five days, trading at approximately $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 the software and infrastructure business, according to preliminary second-quarter 2026 financial results.
The notable IBM share sell-off today comes amid growing predictions of an AI stock market crash, as Finbold reported. The AI bubble burst predictions for 2026 have solidified after the Fed signaled that the AI boom has fueled inflation.
As such, HSBC’s 12-month prediction for International Business Machines stock could be realized if the AI stock market crash occurs, and vice versa.
