IBM preannounced Q2 earnings below expectations, citing a shift in client spending toward AI servers and memory amid supply constraints.
IBM stock plunged over 25% Tuesday after the company warned its Q2 earnings would fall short of Wall Street estimates. Adjusted earnings per share came in at $2.93 on revenue of $17.2 billion, missing forecasts of $3.02 EPS and $17.86 billion in revenue.
Analysts had expected modest declines, but the drop in software and mainframe sales was steeper than anticipated. CEO Arvind Krishna attributed the shortfall to clients reallocating capital expenditures toward servers, storage, and memory to secure supply-constrained infrastructure.
The global memory shortage has also impacted enterprise and consumer tech, including products from Apple, Microsoft, Sony, and Nintendo. IBM’s stock was down 4.8% year-to-date before the warning.