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IBM (IBM) stock fell in heavy volume during Thursday trading after technology consulting rival Accenture (ACN) warned U.S. government business could see slower growth.
As the Trump administration and Elon Musk’s DOGE initiative aims to cuts federal spending, Accenture’s leadership said early Thursday that “many new procurement actions have slowed.” The warning came as part of Accenture’s fiscal second quarter earnings report.
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IBM could face similar concerns, Evercore ISI analyst Amit Daryanani told clients Thursday. He rates IBM stock a buy with a 275 price target.
“We think Accenture’s updates on federal government spending headwinds and elevated macro uncertainty bodes negatively for IBM’s Consulting segment and could dampen the prospects of a (second-half) recovery in that business,” Daryanani wrote. “We estimate IBM has roughly 10-15% public sector exposure at the consolidated level.”
On the stock market today, IBM stock is down around 4% at 242.26 in recent action.
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IBM’s consulting revenue fell 2% for its December-ended fourth quarter. That was a rare negative in what was a well-received quarter for the Armonk, N.Y.-based tech giant. IBM rallied following its Q4 report in late January.
IBM stock rallied more than 35% last year, helped by momentum for it AI offering for enterprises. Shares returned to record highs for the first time in a decade.
While shares have come off highs from early February, IBM has held up better than most other tech giants. Shares are ahead 10.7% overall on the year while each of the Magnificent Seven stocks is now trading in the negative for the year.
But IBM broke below its 50-day line in heavy volume with Thursday’s fall. Shares also fell below a former 239.35 cup-base buy point from December during earlier trading.
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