IBM reported Q2 revenue of $17.2 billion, missing estimates of $17.85 billion, as clients shifted spending to hardware amid supply constraints.
IBM shares tumbled as much as 23% in premarket trading after the company reported preliminary Q2 revenue of $17.2 billion, below the $17.85 billion analysts expected. Adjusted earnings per share of $2.93 also fell short of the $3.01 consensus, marking the steepest single-day drop since 1987.
The shortfall was driven by a 7% decline in infrastructure revenue, as clients redirected capital budgets toward servers and storage to secure supply-constrained hardware. Software growth of 5% and flat consulting revenue failed to offset the weakness, though IBM’s mainframe business was not the primary issue.
The warning triggered mixed reactions from banks, with one cutting its price target while another raised it, reflecting uncertainty over IBM’s near-term outlook.