By Adam Button
Publication Date: 2026-02-09 18:03:00
One of the themes in markets right now is that the ‘old economy’ stocks are rising while the AI stocks are sliding. It’s something of a mean reversion trade but could also highlight some positive cyclical signs in things like manufacturing and transport.
But here is an ‘old economy’ company that I didn’t not expect to be trading cheaper than a company that’s synonymous with computing.
As of this morning, IBM’s Forward consenus P/E ratio (~24.08x) has officially crossed above Microsoft’s (~22.87x).
For the last decade, the trade was simple: buy growth, buy cloud, buy MSFT. IBM was the “dead money” dividend stock your grandfather owned.
But the narrative in 2026 has flipped violently.
Microsoft (MSFT) is suddednly in the penalty box. The Melius downgrade to “Hold” this morning is just the cherry on top of a rough few months. Investors are officially exhausted by the “Capex Black Hole.” Redmond dropped $37.5B in capital expenditures last quarter alone, and the street is finally asking the…
