Typically, when a company releases preliminary financial results before its official earnings release date, it’s not to brag.
It’s because it wants to cushion the looming blow for investors
And that’s exactly what IBM (NYSE: IBM) did on Tuesday, releasing preliminary second-quarter results ahead of its scheduled earnings release on July 22. IBM expects revenue of $17.2 billion (up 1% year over year) and adjusted earnings per share of $2.93. Both figures were below analysts’ expectations, but the bigger problem for IBM is the “why” behind the shortfall: a shift in AI spending habits.
IBM’s leadership says that AI spenders are redirecting more of their budgets away from software and toward servers, storage, and memory, offering insight into the current state of AI development. Companies are trying to be proactive As companies have continued to build data centers and other AI infrastructure, the need for storage and memory has increased dramatically, resulting in a severe shortage. And due to the law of supply and demand, that shortage has led to sharply higher prices for that hardware and these chips.