Evercore ISI identifies IBM and AppLovin as potential funding sources for upcoming AI IPOs, citing negative earnings revisions and the need for investors to liquidate existing positions to capture new market opportunities.
IBM is identified by Evercore ISI as a potential casualty of portfolio rebalancing as investors liquidate positions to fund upcoming high-profile AI IPOs. This pressure is compounded by internal challenges, including a 7% decline in infrastructure revenue and a $300 million drop in free cash flow, which leaves the stock vulnerable to negative sentiment and seasonal tax-loss selling.
Evercore ISI suggests investors may sell existing underperforming holdings like IBM to raise capital for new, high-profile AI listings.
The company is struggling to restore operating momentum, evidenced by a 42% drop in IBM Z revenue and declining free cash flow.
Evercore ISI analysts warn that IBM and AppLovin may face near-term selling pressure as investors rebalance portfolios to fund potential OpenAI and Anthropic listings. While both companies navigate unique operational challenges, the risk of seasonal tax-loss selling and capital rotation toward new AI entrants creates a volatile outlook for current shareholders.
Evercore ISI suggests these stocks may be sold by investors looking to raise liquidity for potential upcoming IPOs from companies like OpenAI and Anthropic, particularly given their recent negative earnings-revision trends.
No. A decline may reflect temporary portfolio rebalancing or seasonal tax-loss selling rather than a fundamental deterioration in business economics, though investors must distinguish between the two.