IBM Shares Retreat as Analysts Signal Mainframe Peak Despite $12.5B AI Surge

IBM shares closed at $258.31 on February 17, marking a 1.55% decline. The stock traded at $259.02 on February 18, representing a 0.28% recovery.

Erste Group downgraded IBM from Buy to Hold due to concerns over slowing mainframe growth. This follows late January Q4 2025 results showing 12% revenue growth. The company reported a generative AI book of business exceeding $12.5 billion.

Infrastructure segment revenue jumped 21% behind the AI capabilities of the new z17 mainframe. Software revenue grew 14% following the HashiCorp acquisition. Analysts now express concern that the mainframe cycle is reaching its peak.

IBM issued free cash flow guidance of $15.7 billion for 2026. The pending $11 billion acquisition of Confluent introduces additional execution risk. The S&P 500 rose 0.71% today, providing some support for the broader market.