IBM shares plunge 25% amid AI‑infrastructure spending shift

On July 14 IBM’s shares fell roughly 25% in a single trading session, the steepest one‑day decline in the company’s 115‑year history, erasing about $68‑70 billion of market value. The slide followed a preliminary Q2 2026 earnings update that projected revenue of $17.2 billion—about $660 million below analysts’ expectations—and adjusted earnings per share of $2.93 versus the forecast $3.02. CEO Arvind Krishna said the miss stemmed from a rapid shift in corporate capital‑expenditure toward AI infrastructure such as servers, storage and memory, which delayed purchases of IBM’s mainframe systems and related software. Software revenue grew only 5%, consulting was flat and infrastructure revenue fell 7%, further hurting the outlook. The market reaction drove IBM’s stock from around $290 to $217, prompting declines in other software stocks and prompting analysts to label the day one of IBM’s worst on record. The episode underscores how a reallocation of spending toward AI‑hardware can sharply impact legacy technology firms.