IBM Stock Crashes 25% as Q2 Earnings Miss Analysts' Forecasts

IBM shares plunged 25% on July 14, the company's worst single-day performance in its 115-year history. The rout followed a disappointing Q2 earnings report in which IBM blamed lower-than-expected revenue on customers redirecting spending toward AI and cybersecurity infrastructure ahead of anticipated price increases. CEO Arvind Krishna acknowledged the company was slow to adapt to the shift and that several large deals slipped past their expected close timelines.

The warning rippled across the sector, dragging down other software and IT-services names as investors read the miss as evidence of a broader budget reallocation rather than a company-specific stumble. As AI investment accelerates, enterprises are prioritizing memory chips, servers and storage for AI infrastructure, leaving thinner budgets for traditional software and consulting.

For IBM, the reset underscores a new phase of the AI spending boom in which some vendors win at the expense of others. The near-term question is whether the slipped deals close in the second half, which would frame the drop as timing-driven, or whether the spending mix has structurally moved away from IBM's core.