Yesterday, Meta beat analysts' consensus on both sales and profit forecasts, yet its share price fell by 10%; Tesla, for its part, reported results below consensus at all levels, but its share price gained 10% in the process.

Just before, the US central bank dashed hopes of a rate cut; instead of plummeting, gold climbed straight to record highs, while the dollar lost ground against the euro as the ECB forecast a rate cut in June.

In a market where stories - rather than fundamentals - make or break valuations, the market capitalization of certain companies can rise overnight to $180 billion, only to fall back like a soufflé to less than $9 billion...

The list is endless, and perhaps IBM should be added to it. Yesterday, the dinosaur of "old tech" published yet another pathetic set of quarterly results, with sales growth of just 1% compared with the same period last year. despite the $10 billion invested in acquisitions over the last three years.

So what return on investment is IBM getting from its external growth strategy? In principle, none. As it stands, its only merit seems to be in stemming an otherwise irresistible decline. In that case, it would make sense to count acquisitions as a current investment expense and subtract them from the free cash flow calculations put forward by management.

We have already discussed this dynamic in the light of the Armonk-based group's latest annual results, pointing out that free cash flow before acquisitions had fallen by 20% in ten years, despite more than $40 billion invested in acquisitions. Readers who often ask us about the meaning of value creation have here a convincing example of value destruction.

IBM's stock market valuation had taken full advantage of the AI boom, and now stands at a multiple of twenty-five times earnings growth. In pre-market trading this morning, it is suffering from last night's publication, with a drop of 8.5%. A more pronounced fall at the opening of the session would suggest that investors are no longer fooled.