IBM shares plunge after weak preliminary earnings and outlook warning

IBM shares fell about 25% on Tuesday after preliminary second-quarter results missed expectations and pointed to a sharp shift in customer spending toward data-center hardware. The decline erased roughly $67 billion in market value and sent a fresh warning across software and IT-services stocks.

IBM released selected preliminary second-quarter 2026 figures early to explain the miss before its full earnings report, scheduled for July 22, 2026. Revenue came in at $17.2 billion, up 1% from a year earlier but still below expectations, while operating earnings were $2.93 a share, short of the $3.01 analysts had expected. Software revenue rose 5% in the quarter, consulting was flat, and infrastructure revenue fell 7%.

Arvind Krishna said IBM had “faltered” in keeping pace with the shift in corporate spending away from software and toward data-center infrastructure. IBM attributed the shortfall to a weaker-than-expected mainframe cycle and a late-quarter change in customer priorities toward servers, storage and memory purchases. Krishna said IBM did not anticipate the scale of the capital-spending reprioritization.

IBM expanded its z17 lineup only a week earlier, on July 7, 2026, alongside LinuxONE 5 configurations aimed at AI, security, resilience and performance in enterprise environments. Customers deferred some software and consulting spending while funneling money into infrastructure tied to artificial intelligence and other data-intensive projects.

The selloff hit the broader enterprise software complex. Shares of Accenture, Cognizant Technology Solutions and Infosys also fell. IBM's one-day drop was its worst on record, exceeding the 23.7% plunge on Oct. 19, 1987.