IBM, Honeywell, and Cisco Stocks Remind Us That If You’re Not Invested in AI, You’re Losing in Today’s Market

The recent earnings reports from three pillars of the legacy tech world – International Business Machines (IBM), Honeywell (HON), and Cisco (CSCO) – offer a masterclass in the fragmented reality of the 2026 stock market. 

While the headline indices continue to be buoyed by the concentrated power of the Magnificent 7, the performance of these veteran players exposes the “winner-take-all” friction that defines the other 450-plus stocks in the S&P 500 Index ($SPX).

Part of that transition from a market that used to work one way, and now operates very differently, is earnings season. It has become a high-stakes gauntlet where even moderate success is punished and only perfection is rewarded.

Thursday, two of those technology legacy names became a perfect illustration of the current regime. IBM and HON each saw immediate selling pressure post-earnings. 

Despite stable long-term outlooks, the market’s current impatience with anything lacking a direct, explosive AI catalyst led to a swift repricing. IBM’s year-to-date return has slipped into negative territory, serving as a reminder that legacy status is currently a headwind in a market obsessed with newness. 

Why Is CSCO Doing So Well When IBM and HON Are Fading?

Conversely, CSCO has managed to catch a bid, surging with a 52-week return of over 50%. That, for a stock that went more than 20 years without appreciating. That’s how bad the dot-com bubble was for the last set of in-vogue tech stocks. By successfully rebranding its networking hardware as essential for AI data centers, Cisco has managed to escape the tag of legacy laggard and get a seat at the cool kids’ table. 

This shows just how out of favor the “average stock” has been for years. EQAL (EQAL) is the average of the 1,000 biggest stocks. It is trailing QQQ (QQQ) by double-digit percentage amounts over all three time frames shown. 

So clearly, this split performance is not just a tech story. It is the definitive market story of the decade. For non-index-hugging investors who own a diversified basket of stocks like IBM, HON, and others, the result has been years of inferior results compared to the SPY (SPY), QQQ and XLK (XLK).

Here are the charts of all three of those legacy stocks. As noted, CSCO has made the turn in the eyes of investors. IBM and HON have not.

That’s why CSCO looks like this. That’s a powerful move that has it stretched, but still very much in bull mode for now.

This is IBM. Not a disaster, but flat for the past 18 months. I assume the result is lots of FOMO.

And HON is nearly a carbon copy. Which is ironic since these stocks were technology kings when carbon copies were important in the tech business. The earnings reaction here looks more dangerous to me than IBM’s.

How Legacy Stocks Stack Up with ROAR 

For anyone who would for a second read about my ROAR Score indicator and say, “this is a bad look,” this last picture is for you. Because this is exactly what that automated technical chart reading method is about. And how the goal is to help investors pay more attention to what they can lose on any investment. Not just what they can make. 

The snapshot score, which is smoothed over a 10-day period to try to reduce “noise” in the daily scores, is one data point. It is best viewed in context, and as one security in a tactical portfolio. That’s how I use it, and how I have invested for decades. Portfolios over picks.

CSCO is the highest-rated, which makes sense given the charts above. But that snapshot hides the backstory, which in CSCO’s case is critical. And typical, in finding lower-risk positions. 

At a score of 30, CSCO at under $79 a few months ago was a “higher risk” proposition. ROAR is not about “buy/sell/hold.” It is about trying to assign a risk level at any point in the cycle. 30 does not mean no chance to appreciate. Only that the odds are a bit longer. But as the score gradually rises, the risk is perceived to be lower. 

Buying CSCO at $79 back 60 days ago produced a higher return than buying it at $83 just 10 days ago. But the latter entry point was a lower-risk one. A ROAR Score of 30 does not mean “no chance.” It means “higher risk.” IBM and HON had middle of the road risk. 

In those cases, the 40 (the other side of the green 60 in the score) won out this time. Earnings announcements are a tossup in any investing system.

Rob Isbitts created the ROAR Score, based on his 40+ years of technical analysis experience. ROAR helps DIY investors manage risk and create their own portfolios. For Rob's written research, check out ETFYourself.com.