IBM’s worst day in 20 years was a surprisingly reasonable one for the market. The IT giant’s stock fell 25 per cent on Tuesday, but the S&P 500 closed slightly up, showing that nothing in the tech sector is spilling over.

Chief executive Arvind Krishna warned that demand for IBM’s mainframe products would shrink faster than expected because of a “capex reprioritisation”. In plain English, customers are deferring big‑box purchases to buy servers, storage and memory, where prices are rising. The company’s long‑term outlook remains unchanged, but investors sliced a quarter off its market value, underscoring how timing can swing equity prices.

An immutable rule of finance is that money due tomorrow is worth less than the same money arriving today. A company with a cost of capital of 10 per cent sees a 20‑year‑later cash flow worth a fifth of its present value. Modest shifts in timing can therefore cause outsized valuation swings, a lesson that applies to AI providers as well.

Silicon Valley is reacting: Meta Platforms may rent out surplus computing power, and Elon Musk’s x AI, part of Space X, has begun doing the same. Investors are paying close attention to when rather than how AI projects will roll out.