IBM shares plunge after preliminary Q2 revenue miss

IBM shares fell as much as 24% in premarket trading after the company issued preliminary second-quarter results that missed Wall Street estimates. The 115-year-old company is on pace for its worst single-day drop, surpassing the 23.7% decline on Black Monday in 1987 Source: CNN.

The results

IBM reported preliminary adjusted earnings of $2.93 per share on revenue of $17.2 billion, below the $3.01 per share on $17.86 billion that analysts had expected Source: AP News. Software revenue rose 5% but fell short, while consulting was flat and infrastructure dropped 7%. The only bright spot: cumulative AI bookings surpassed $12 billion Source: The Next Web.

Why it happened

CEO Arvind Krishna blamed a shortfall in the Z mainframe business and clients shifting capital spending toward servers, storage, and memory ahead of expected tariff-related price increases Source: Fox Business. "We did not adapt and move quickly enough, and numerous large deals failed to close on the timelines we expected," Krishna wrote to investors Source: CNBC. Additionally, cybersecurity concerns triggered by Anthropic's Mythos AI model caused customers to pause new deals Source: CNN.

Market reaction

The broader tech sector felt the shock, with software stocks like ServiceNow, Salesforce, and Microsoft sliding . Meanwhile, cybersecurity stocks jumped after Krishna flagged cyber fears; Okta, Netskope, and CrowdStrike rose about 10% each . IBM plans to release full quarterly results on July 22.