IBM’s Q2 revenue miss due to capex shifts sparks sector rotation, lifting chipmakers as the Dow edges lower.
IBM shares plunged after CEO Arvind Krishna revealed a sharp drop in software sales, as clients redirected IT budgets toward hardware like servers and memory chips. The company’s premarket warning cited “numerous large deals” failing to close in June due to unexpected capex reprioritization, marking its worst day in 39 years.
The S&P 500 rose 0.3% midday, while the Dow fell 0.2%, weighed by IBM’s decline. Meanwhile, the Nasdaq Composite surged 0.9%, led by a semiconductor rally. SK Hynix jumped 18.5%, recovering from Monday’s 8.4% loss, as chip stocks rebounded from a broader sell-off.
The shift highlights corporate urgency to secure hardware amid rising costs, leaving software providers like IBM scrambling to adapt. The Dow’s modest loss contrasts with the tech-heavy Nasdaq’s gains, reflecting divergent sector performance.