IBM suffered a historic 25% single-session plunge after pre-announcing a $700 million revenue miss and adjusted earnings per share of $2.93 versus the expected $3.01. The episode, which hosts John C. Dvorak and Andrew Horowitz called the worst day on record for Big Blue on the podcast DH Unplugged, rattled markets and prompted a broader discussion about the implications for enterprise technology spending. Management warned that customers are redirecting spend toward AI servers, memory, and hardware while delaying software purchases, a shift that lifted competitors Dell and Hewlett Packard Enterprise by 7% and nearly 5% respectively on the same session.
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. He described the phenomenon as "cradling," his term for algorithmic rotation that props up indices even as individual names get hammered. The hosts walked through a chart of the S&P 500's best quarters since 1990, noting that April 2020 and the post-March 2009 rebound both followed massive stimulus, and that momentum has historically carried into the next quarter.
The episode also covered blowout bank earnings from JPMorgan ($21B net revenue, 86% jump in equities), Bank of America ($9.1B net income), Goldman Sachs ($6.6B profit, $20.98 EPS), and Citigroup (net income up 45%). SK Hynix's $26.5 billion NASDAQ ADR listing was oversubscribed seven times, underscoring strong demand for memory chips tied to AI infrastructure. Meanwhile, oil surged toward $80 after President Trump walked back a proposed 20% Strait of Hormuz reimbursement fee, and a cyclosporiasis outbreak spread across 30 states.
On the AI front, the hosts examined Odysseus: The Fall, a 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. They also unpacked Apple's lawsuit against OpenAI over alleged trade-secret theft involving former hardware chief Tang Tan and Chang Liu, with more than 400 ex-Apple employees now at OpenAI. Stock picks included Amazon and Micron, both rated long.
For investors, the IBM collapse signals that legacy tech companies may struggle as customers prioritize AI hardware over traditional software and services. The broader market rotation, as described by Horowitz, suggests that indices may remain buoyant even as individual names correct, a dynamic that could persist if algorithmic trading continues to dominate. The episode is available at DH Unplugged and on Apple Podcasts, Spotify, and Amazon Music.
