Yes. Image stabilization can fail for several practical reasons.

Common hardware causes include:

• a failed IS/VR switch
• faulty motion/gyro sensors
• a control-system or electronics failure
• failed stabilization motors
• jamming of the moving lens elements used for stabilization

These faults can be triggered by:

• manufacturing defects
• physical shock, such as dropping the lens or camera
• moisture or water damage
• dirty electrical contacts between lens and camera body

A strong magnetic field was also suggested as a possible cause, since optical stabilization systems commonly rely on motion sensors and actuators.

If stabilization suddenly stops working, check the obvious first: make sure the IS switch is on, clean the lens contacts, and test the lens on another compatible body if possible. If the problem remains, it likely needs service or repair.