Investors are closely monitoring the market as U.S. tech giant IBM sees a sharp drop of over 22% in pre-market trading, while semiconductor and memory chip stocks are collectively rebounding.
On July 14th, U.S. stock futures showed mixed performance before the market opened. The Nasdaq index futures rose by 0.57%, while Dow Jones Industrial Average futures fell by 0.57%, and S&P 500 index futures dipped by a slight 0.07%.
Notably, shares of the American technology behemoth IBM plummeted in pre-market trading due to its preliminary second-quarter revenue falling short of expectations. At the time of writing, the stock's decline had widened to 22.55%.
On the news front, IBM's preliminary Q2 revenue came in at $17.2 billion, below market estimates of $17.86 billion. Within this, software revenue grew by 5%, while infrastructure revenue declined by 7%.
IBM CEO Arvind Krishna stated that clients are shifting capital expenditure towards servers, storage, and memory devices to address industry-wide supply shortages, leading to reduced investment in IBM's software offerings. "In this environment, our team needed to execute flawlessly, and this quarter we fell short," Krishna said. "Our speed of adaptation and execution was insufficient, and several large deals failed to close within the expected timeframe, which is the primary reason for the performance shortfall."
Krishna further noted that the actual operating conditions in the second quarter were worse than anticipated, with the deterioration exceeding initial forecasts. Multiple significant orders were not finalized as scheduled, and the backlog for distributed infrastructure business at the end of Q2 was approximately $500 million. The company anticipates delivering its first large-scale fault-tolerant quantum computer by 2029.
However, Morgan Stanley has raised its price target for IBM from $267.00 to $293.00.
IBM, founded in 1911 and headquartered in Armonk, New York, USA, is a multinational technology corporation. Once famously known as "Big Blue," it is currently the world's largest information technology and business solutions company, with operations spanning software, consulting, infrastructure, and quantum computing.
Following the release of IBM's preliminary results, shares of other U.S. software companies also declined in pre-market trading. Accenture fell over 7%, Intuit dropped nearly 6%, with Adobe, Atlassian, and Oracle also following the downward trend.
In contrast, U.S. semiconductor and memory-related stocks collectively advanced before the market opened. Shares of SanDisk, Western Digital, and Seagate Technology all rose more than 3%.
This movement comes as SemiAnalysis, a top-tier research firm focused on semiconductors and AI infrastructure, released a report titled "Be Greedy When Others Are Fearful: SK Hynix's DRAM Pricing and Profits Remain Strong." The report indicates that SK Hynix's DRAM profitability for Q2 2026 and beyond is expected to remain robust.
Some analysts point out that while they fully understand recent investor concerns about volatility in the memory sector, SK Hynix and other leading memory companies are among the semiconductor investments with the most attractive risk-reward profiles currently, especially following a period of market adjustment.
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