IBM warns AI boom is squeezing software budgets, triggers sector rout
IBM said clients shifted spending toward AI hardware and cybersecurity concerns delayed large deals, while cumulative AI bookings topped $12 billion.
- Shares of IBM fell nearly 23% on Tuesday after the company forecast second-quarter revenue of $17.2 billion, missing the Wall Street consensus estimate of $17.86 billion.
- Company CEO Arvind Krishna attributed the shortfall to clients shifting capital spending toward servers, storage, and memory products, causing numerous large deals to miss their expected closing dates.
- The company reported adjusted earnings of $2.93 per share on $17.2 billion in revenue, missing the $3.02 estimate and the $17.86 billion revenue consensus.
- IBM's announcement sparked a market rout, dragging down software stocks and Dow futures as International Business Machines' shares slumped 20% in premarket trading.
- Reiterating its long-term strategy, IBM remains on track to deliver a large-scale fault-tolerant quantum computer by 2029, while Consulting signings continued to grow.
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106 Articles
HSBC Cuts IBM Rating to Reduce Amid 22% Stock Plunge, Warning Investors of Further Downside Ahead
HSBC has cut its rating on IBM to 'Reduce' and set a £152.80 ($191) price target after the technology giant's shares slumped 22 per cent to £180.16 ($225.20) in Tuesday morning trading, wiping out billions in market value in one session. The move followed chief executive Arvind Krishna's surprise release of preliminary second-quarter results for 2026 that missed expectations, as he told investors the company had stumbled when several large corpo…
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rtl.luIBM shares plunge as AI spending boom disrupts business
Shares in IBM plunged 24% on Tuesday after the U.S. tech giant released disappointing preliminary second-quarter results, blaming a shift in customer spending due to expected higher prices for memory chips and other AI-related ...
What smart people are saying about IBM's AI warning and SaaSpocalypse fears
CEO Arvind Krishna wrote a letter to shareholders eight days before the company was supposed to release its quarterly earnings.Mandel NGAN / AFP via Getty ImagesIBM's CEO released a letter to shareholders on Tuesday to warn about a "performance shortfall."The revenue miss renewed fears about a SaaSpocalypse.We gathered what business and tech leaders are saying about the letter — and its wider impact.IBM is on pace to have its worst day ever on t…
The IBM actions suffered a historic collapse on Tuesday, after the technological giant announced preliminary results much below the analysts' expectations. It is the worst day for the company in the last nearly 40 years, since "Black Moon" in October 1987.
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