People work on the floor of the New York Stock Exchange (NYSE) on July 07, 2026 in New York City.
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International Business Machines shares plummeted 25% on Tuesday after the hardware, software and consulting provider released preliminary second-quarter results that fell short of expectations.
The stock logged its worst day on record, sinking further than its previous worst day of Oct. 19, 1987, when shares fell 23.7%. Records track trading activity back to 1968, though IBM has been a listed company on the New York Stock Exchange since 1916.
The tech company reported adjusted earnings of $2.93 a share on revenue of $17.2 billion, below analysts’ expectations for earnings of $3.01 a share and revenue of $17.86 billion, according to FactSet.
CEO Arvind Krishna blamed the shortfall on weakness in the software and infrastructure business, as clients shifted spending toward hardware purchases such as memory chips.
“In the last few weeks of June, we saw clients shift their quarterly capex spend toward servers, storage, and memory purchases to secure supply-constrained infrastructure ahead of expected price increases,” Krishna wrote in a letter to IBM investors. “While we anticipated some supply chain related impact in our expectations, we did not anticipate the magnitude of the capex reprioritization.”
5-day stock chart of International Business Machines
“These conditions require our teams to execute perfectly, and this quarter we faltered. We did not adapt and move quickly enough, and numerous large deals failed to close on the timelines we expected, driving the majority of our shortfall,” Krishna added.
In IBM’s previous quarter, the company’s software revenue grew 11% to $7.05 billion in the first quarter, helping lift the company to report stronger-than-expected results that returned an adjusted $1.91 per share versus $1.81 expected by analysts.
First-quarter revenue came in at $15.92 billion, also topping estimates of $15.62 billion.
Tuesday’s slip comes as fears continue that the growth in artificial intelligence tools will disrupt the businesses of the biggest software companies.
“Mythos is making people pause to say, wait, how much do I need to spend on cyber? They’re pausing on new deals until they know,” Krishna told CNBC’s Sara Eisen Tuesday, referring to Anthropic’s AI cybersecurity model. “We don’t see our software being disrupted by AI at all.”
Memory names like Micron and SK Hynix have been among the latest beneficiaries of the buildout, as demand linked to running and processing AI workloads skyrockets.
