IBM’s preliminary Q2 revenue of $17.2 billion missed expectations as AI-driven spending shifts hit infrastructure sales.
IBM shares tumbled 24% in premarket trading after the company released preliminary second-quarter results early, marking its steepest one-day decline since 1987. Revenue rose 1% year-over-year to $17.2 billion, but infrastructure sales fell 7% as customers redirected budgets toward AI-related hardware and storage.
CEO Arvind Krishna acknowledged the company failed to adapt quickly enough to the spending shift, which delayed large deals and weighed on results. Software revenue grew 5%, but the infrastructure division’s decline offset gains, surprising investors.
The drop reflects broader market concerns over tech spending priorities, as enterprises prioritize AI infrastructure over traditional IT projects. IBM did not provide further comment on the results.