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IBM shares plunge after AI spending fails to boost key segments
IBM fell 25.2% on July 14, wiping out about $68 billion in market value after preliminary results showed weaker software and infrastructure performance than expected.
IBM’s stock dropped 25.2% on July 14, marking the company’s worst session on record and erasing about $68 billion in market value, according to Yahoo Finance. The sell-off came as investors weighed IBM’s position in the AI investment cycle, which Gartner projects will rise 47% to $2.59 trillion in 2026. Yahoo Finance said the core issue was timing and mix, with AI-related spending shifting toward hardware at the same time IBM missed mainframe targets and slipped on large deals. IBM released the warning eight days before its scheduled earnings report, with preliminary second-quarter revenue up just 1% to $17.2 billion, about $660 million below the LSEG consensus. Yahoo Finance also reported adjusted earnings of $2.93 per share, below the $3.02 estimate, with software growth slowing to 5%, Consulting flat, and Infrastructure down 7%. In an investor letter, CEO Arvind Krishna said clients used the final weeks of June to rush purchases of supply-constrained servers, storage, and memory ahead of expected price increases. Yahoo Finance added that cybersecurity concerns also competed for budgets, while IBM did still see gains in Distributed Infrastructure revenue, up 37%, and some revenue strength was outweighed by weakness elsewhere, including missed expectations for IBM Z and related Transaction Processing software, and several large deals slipping past the quarter.