On July 14, IBM plunged 22.04% in regular trading, trading at $216.04/share, with turnover of $2.411 billion.
The sell-off was triggered by IBM's early disclosure of preliminary Q2 results that significantly missed market expectations. Revenue came in at $17.2 billion versus the consensus estimate of $17.86 billion, approximately 4% below expectations. Adjusted EPS was $2.93, also missing the FactSet estimate of $3.01. Infrastructure revenue declined 7% year-over-year, with the z17 mainframe cycle underperforming.
CEO Arvind Krishna attributed the shortfall to the company failing to close numerous large deals on expected timelines, noting that clients adjusted quarterly capital expenditures in June. HSBC downgraded IBM to Reduce from Hold, cutting its target price from $231 to $191. The earnings miss reignited concerns that AI hardware spending is cannibalizing enterprise software budgets, dragging down the broader software sector with Accenture falling nearly 5%, ServiceNow down 5.8%, and Salesforce declining 5%.
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