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IBM just lost tens of billions of dollars in value in a single morning.
International Business Machines stock fell sharply on Tuesday, July 14, 2026, after the company issued a preliminary warning that its 2nd quarter revenue and profits would likely miss Wall Street’s forecasts.
Immediately, shares dropped as much as 23% in premarket trading and continued to fluctuate throughout the morning, dropping from Monday’s closing price of $290.23 to between $218 and $241. The decline wiped out tens of billions of dollars in market value in a matter of hours.
The drop was especially surprising because IBM’s stock had been performing well. It had risen 21% over the previous three months and reached a record closing high in early June. However, Tuesday’s sharp sell-off wiped out most of those gains in a single day.
What IBM Reported
IBM now expects Q2 revenue of about $17.2 billion, up 1% from last year, but below the $17.85 billion analysts were expecting.
The company also expects adjusted earnings of $2.93 per share, slightly lower than Wall Street’s estimate of $3.01 per share. Under standard accounting rules (GAAP), earnings are expected to be $2.27 per share, down 2% from a year ago. IBM also expects its pretax profit margin to fall to 14.4%.
Performance differed across IBM’s businesses:
- Software revenue is expected to grow 5%.
- Consulting revenue is expected to remain unchanged.
- Infrastructure revenue is expected to drop 7%.
These are preliminary results, not IBM’s full earnings report. The company will release its complete second-quarter results and discuss them during its earnings call on July 22, 2026.
Why the Company Fell Short
CEO Arvind Krishna explained the shortfall in a letter to investors. He said the weaker results were due to a sudden shift in customer spending near the end of June.
Instead of buying more software and consulting services, many customers chose to spend on hardware, such as servers, storage systems, and memory, to secure supplies before expected price increases. IBM expected some impact from supply chain issues but said the shift was much bigger than anticipated. Krishna said IBM had anticipated some disruption from supply chain conditions but did not expect the shift in customer spending to be this large.
He also said sales of IBM’s new z17 mainframe, which is designed for AI workloads and widely used by large businesses, were weaker than expected. The company had expected infrastructure revenue to decline only slightly, but it fell much more than forecast.
Krishna acknowledged that IBM also made mistakes. The company didn’t respond quickly enough to changing market conditions, and several large customer deals were delayed instead of closing on time. Those delays were responsible for most of the earnings shortfall.
Ripple Effects Across the Industry
IBM’s warning also hurt other tech companies. Shares of ServiceNow, Salesforce, Accenture, and Cognizant Technology Solutions all fell on Tuesday.
Investors worried that the same trend IBM described, with businesses spending less on software and consulting services and more on hardware, could also reduce sales and profits for other companies that rely on software and IT services.
The Bigger Picture
The warning comes at a time when IBM has been investing heavily in newer technology bets. The company has committed to spending more than $10 billion on quantum computing over five years, aiming to deliver a large-scale, fault-tolerant quantum computer by 2029. It has also expanded its artificial intelligence partnerships, including a recent collaboration with OpenAI focused on AI-powered application security for enterprise clients.
None of those longer-term initiatives were cited as a factor in Tuesday’s shortfall. The warning was specifically tied to a short-term shift in how corporate clients allocated spending in the final weeks of the quarter, as well as delays in closing large deals.
Investors will get a fuller picture of IBM’s second-quarter results, along with management’s outlook for the rest of the year, when the company reports full results on July 22, 2026.
