IBM's stock plunged 24.78% during pre-market trading on Tuesday, marking one of the most significant single-day declines for the technology giant in decades.
The sharp selloff followed IBM's surprise release of preliminary second-quarter financial results that fell short of Wall Street expectations. The company reported revenue of $17.2 billion, missing the consensus estimate of $17.86 billion, while adjusted earnings per share came in at $2.93 versus the expected $3.01. In a letter to investors, CEO Arvind Krishna explained that clients shifted their capital expenditure toward servers, storage, and memory purchases in late June to secure supply-constrained infrastructure ahead of expected price increases, which impacted IBM's software and infrastructure business performance.
Krishna acknowledged that "what played out was worse than our expectations," noting that numerous large deals failed to close on the expected timelines. The preliminary results triggered concerns about AI disruption in the software sector, with other enterprise software companies also experiencing declines in pre-market trading. If the decline holds through regular trading, it would represent IBM's worst single-day performance since October 1987.
