IBM Sheds Blockchain Patents as Mainframe Woes Deepen a Historic Selloff

IBM shares plummet 26% as Oracle targets mainframe lock-in and AI spending shifts. IBM sells blockchain patents to Circle, signaling strategic retreat.

The numbers tell a stark story. IBM’s stock crashed 26 percent on July 14, 2026, a single-day rout that drew comparisons to the Black Monday of 1987 in terms of relative force. The shares now trade at around 198 euros, clawing back 9 percent over the past seven sessions from a July 23 low of 175.14 euros. But even with that bounce, the stock remains down nearly 24 percent year-to-date, and the structural questions that triggered the collapse are far from resolved.

What sent investors running was not just a profit warning, but a recognition that IBM’s core business model is being squeezed from two directions at once. On one side, corporate clients are diverting IT budgets away from traditional infrastructure toward artificial intelligence projects — a shift CEO Arvind Krishna has acknowledged directly. On the other, Oracle has launched a targeted assault on IBM’s long-impregnable mainframe fortress.

Oracle’s EBCDIC Gambit

In late July 2026, Oracle made its AI Database compatible with the EBCDIC character set — the encoding system underpinning many legacy IBM mainframe databases. The move may sound like technical minutiae, but it removes one of the last practical barriers that kept customers locked into IBM’s ecosystem. For decades, switching away from mainframes was prohibitively complex. Oracle just made the exit ramp significantly wider.

The implications for IBM are profound. The mainframe business, which saw revenue plunge 42 percent in the second quarter, has long been the company’s highest-margin franchise. That erosion is accelerating precisely as IBM tries to convince markets it can reinvent itself as a software and AI powerhouse.

A Strategic Retreat from Blockchain

Against this backdrop, IBM has made a decisive move to shed a once-promising asset. The company sold its entire blockchain patent portfolio — more than 680 patent families and nearly 1,000 granted patents — to Circle Internet Group. The deal vaults Circle to the top of US blockchain patent holders, covering everything from banking and insurance to supply-chain verification and secure cloud infrastructure.

Financial terms were not disclosed, but the transaction signals a clear strategic withdrawal. Crypto analyst Scott Melker noted that IBM had invested heavily in enterprise blockchain for years and is now exiting entirely, with Circle acquiring the intellectual property position at what Melker called a favorable price. For Circle, the move appears aimed at shoring up defenses against growing competition in the stablecoin market. On the announcement day, Circle shares rose 2.8 percent in premarket trading, while IBM gained a more modest 1.6 percent.

The patent sale is part of a broader pattern: IBM is jettisoning legacy bets while doubling down on future technologies. The company has also been building its quantum computing capabilities, most recently through the acquisition of HRL Laboratories, which strengthens research into silicon-spin qubits — a technology IBM sees as the next big cycle after the current AI wave.

Software Grows, Infrastructure Shrinks

The second-quarter results laid bare the divergence within IBM’s own portfolio. The software division, the company’s profit engine, generated $7.76 billion in revenue, up 5 percent. But the infrastructure segment fell 7 percent overall, with the Z-mainframe business cratering 42 percent. For the full year, IBM forecasts currency-adjusted revenue growth of 4 to 5 percent and expects free cash flow to rise by roughly $1 billion from the prior year.

The company is also leaning into cybersecurity as a growth pillar. A new integration ties threat-intelligence data from Resecurity into IBM’s QRadar platform, allowing customers to monitor security events from multiple sources in a single dashboard. The move positions QRadar as a hub for AI-ready security data at a time when companies are racing to defend against AI-powered attacks.

A Dividend Streak Intact

Despite the turmoil, IBM has maintained its dividend policy. Shareholders will receive a quarterly payout of $1.69 per share, payable to those on record as of August 10, 2026. With the September distribution, IBM will have paid uninterrupted dividends every year since 1916 — a streak that provides some floor for long-term holders.

Institutional sentiment is mixed. Bank of America added to its position in early 2026, signaling confidence in IBM’s hybrid-cloud and security software offerings. But the broader market now values the company at roughly 188 billion euros, well below pre-crash levels.

What the Charts Say

Technically, the stock is still searching for a bottom. The relative strength index sits at 42.1, indicating neutral-to-bearish territory after the extreme oversold conditions of the July crash have faded. The share price remains about 15 percent below its 200-day moving average of 232.79 euros, suggesting the medium-term trend has not yet turned.

The average analyst price target stands at 215.43 euros, roughly 9 percent above current levels. Whether that target proves achievable depends on one central question: Can IBM’s software and services businesses grow fast enough to offset the accelerating decline in its legacy hardware franchise? That question will not be answered in a single quarter, but the coming earnings reports will show whether Krishna’s restructuring is gaining traction faster than Oracle’s assault on the mainframe fortress is gaining ground.