IBM Stock Gets Pummeled as CEO Says Company ‘Falters’ amid Client Shift to AI
1 min read
Key points:
- IBM shares fall 25%
- Tech veteran ‘falters’
- Clients buying servers
IBM CEO sent company shares plunging after warning that a profit squeeze might be on the horizon.
⚠️ Big Blue Falls Off a Cliff
- IBM IBM suffered its worst trading day in modern history after issuing a profit warning that blindsided Wall Street.
- Shares cratered 25%, wiping out nearly $70 billion in market value as investors hit the eject button.
- The selloff was the company's biggest since at least 1972, even exceeding IBM's decline during the 1987 Black Monday crash. Not exactly the kind of history any CEO wants to make.
- Before Tuesday, IBM had already been lagging the broader market, down 2% in 2026 while the S&P 500 had climbed nearly 10%.
🤖 AI Changes the Shopping List
- CEO Arvind Krishna admitted IBM "faltered" in the past quarter as customers redirected spending toward AI servers and storage instead of the company's traditional mainframe systems.
- IBM had expected stronger demand for its mainframes — high-performance computers used by large organizations to process massive workloads — but several major deals failed to close on schedule.
- "These conditions require our teams to execute perfectly, and this quarter we faltered," Krishna said, adding that IBM simply didn't move quickly enough as customer priorities shifted.
📉 Misses Across the Board
- IBM expects quarterly revenue of $17.2 billion, below Wall Street's $17.9 billion forecast. Adjusted earnings are expected at $2.93 per share, missing analysts' estimates of $3.01.
- Infrastructure revenue is projected to fall 7%, while software is expected to grow 5% and consulting remains essentially flat.
- On paper, the miss isn't enormous — but investors were far more concerned about what the CEO says on future demand.
- Ironically, IBM's warning may be bullish for the rest of the AI trade. If companies are delaying traditional IT purchases to spend more on AI hardware, chipmakers and infrastructure providers could be the ones cashing the checks while Big Blue is left holding the receipt.