IBM just suffered the worst single-day decline in its 115-year history.

The stock plunged 25% on Tuesday after the company pre-announced disappointing quarterly results.

Here's the breakdown:

• Revenue: $17.2 billion vs. $17.9 billion expected

• Earnings Per Share: $2.27 vs. $3.02 expected

More importantly, CEO Arvind Krishna explained why:

Customers are shifting their technology budgets toward AI infrastructure and away from the legacy enterprise spending that IBM relies on.

Naturally, investors are asking the same question.

Should I buy IBM on the pullback?

Let’s Follow the Money

If you're running an IT department at a Fortune 500 company today, your budget is going to three places:

• AI hardware – Nvidia GPUs, Dell servers, Micron memory, networking equipment

• AI models and tokens – Anthropic, OpenAI, and other foundation models

• Cybersecurity – Crowdstrike, Palo Alto Networks, etc.

These are the essentials.

Everything else gets pushed down the priority list.

Unfortunately, that includes companies like IBM.

This doesn't mean IBM is a bad business.

It simply means the AI buildout is pulling technology budgets toward infrastructure and away from legacy enterprise spending.

That's the cold reality of this AI buildout.

Now Back to Buying IBM…

Look… I’ve got the easy job here.

I'm writing this after IBM released its bad news and dropped 25%.

The stock now trades at just 16x forward earnings and pays a 3.11% dividend.

And there are still positives to IBM’s business:

• Sticky enterprise customers

• Strong software business

• Promising quantum technology

• More than 100 years of operating history

Eventually, the AI infrastructure spending cycle will mature.

So if you want to buy the stock now and wait… be my guest.

But I won’t be joining you.

As Warren Buffett once said:

"Investing is not like baseball. In baseball, you've got three strikes and you're out. In investing, there are no called strikes. You can stand there with the bat on your shoulder all day."

That's exactly how I feel.

Buying IBM simply because it’s cheap isn't enough.

Especially when you can buy companies trading at similar – or even lower – valuations that are benefiting from the exact trend crushing IBM.

• Micron (MU): ~6x forward earnings

• Nvidia (NVDA): ~16x forward earnings

• Dell Technologies (DELL) : ~17x forward earnings

• Broadcom (AVGO): ~20x forward earnings

• Microsoft (MSFT): ~20x forward earnings

These companies aren't waiting for enterprise technology budgets to come back.

They're receiving those dollars today.

As tempting as it is to buy a 115-year-old company immediately after the biggest one-day decline in its history...

I'm content to keep standing in the batter's box with my bat on my shoulder.

Or better yet...

Swinging at some of the other cheap stocks where the money is already flowing.