Key Stats for IBM Stock
- Pre-Market Price change for IBM stock: -25%
- $IBM Stock Price as of Jul. 13: $217
- 52-Week High: $332
- $IBM Stock Price Target: $295
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What Happened?
International Business Machines Corporation (IBM) stock had its worst day since 1987, falling 23% after the company reported preliminary Q2 results that were well below Wall Street expectations.
Adjusted earnings landed at $2.93 per share on $17.2 billion in revenue, missing forecasts of $3.01 per share and $17.86 billion, respectively. The drop is a sharp reversal from IBM’s Q1, when the company beat expectations across the board.
Back then, adjusted earnings came in at $1.91 per share versus $1.81 expected, and revenue hit $15.92 billion versus $15.62 billion expected.
Software revenue grew 11% to $7.05 billion, making it one of the strongest parts of the business at the time.
CEO Arvind Krishna pointed to a specific shift in customer spending as the main culprit. In a letter to investors, he explained that toward the end of June, clients redirected their budgets away from software and infrastructure spending and toward buying servers, storage, and memory chips instead.
Companies wanted to lock in supply-constrained hardware before prices went up further. Krishna said IBM expected some impact from supply chain issues, but not to this degree.
Krishna was direct about the miss.
He said the environment required flawless execution, and IBM didn’t deliver it this quarter. A number of large deals that were expected to close on schedule didn’t, and that accounted for most of the shortfall.
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What the Market Is Telling Us About IBM Stock
IBM stock’s sharp decline reflects investor concern about whether the company can keep pace in a rapidly shifting spending environment. There’s also broader unease across the software industry about whether AI tools could disrupt demand for traditional enterprise software.
Krishna pushed back on that idea directly in comments to CNBC, saying IBM’s software isn’t seeing disruption from AI.
He noted that new AI-related tools, including Anthropic’s Mythos cybersecurity model, are prompting some companies to pause spending decisions as they determine how much they need to invest in cybersecurity going forward.
Meanwhile, memory chip makers like Micron and SK Hynix have been benefiting from the same dynamic that hurt IBM stock, as demand for AI infrastructure drives companies to prioritize hardware purchases.
That’s exactly the kind of spending shift Krishna described, where IBM’s own customers chose memory and server purchases over software and infrastructure deals with IBM itself.
The size of this drop and the fact that it’s IBM’s worst day in nearly four decades suggest investors are taking the guidance miss seriously rather than viewing it as a one-quarter blip.
Whether IBM stock can stabilize will likely depend on whether the delayed deals Krishna mentioned eventually close, and whether this spending shift toward hardware proves temporary or more lasting.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
