IBM shares drop more than 17% after company warns second-quarter earnings fell short of expectations
People work in the hall of the New York Stock Exchange (NYSE) on July 07, 2026 in New York City.
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IBM’s Shares fell double-digits on Tuesday after the hardware, software and consulting provider reported preliminary second-quarter results that fell short of expectations.
The technology company reported adjusted earnings of $2.93 per share on revenue of $17.2 billion, below analysts’ expectations of $3.01 earnings per share and revenue of $17.86 billion, according to FactSet. Shares lost more than 17% in premarket trading.
CEO Arvind Krishna cited weakness in the software and infrastructure business as the reason for the shortfall, as customers shifted their money to hardware purchases such as memory chips.
“During the last few weeks of June, we saw customers shifting quarterly capital expenditures to servers, storage, and memory purchases to secure supply-constrained infrastructure ahead of expected price increases,” Krishna wrote in a letter to IBM investors. “While we anticipated some supply chain impact in our expectations, we were unable to predict the magnitude of the reprioritization of capital expenditures.”
“These conditions require our teams to work to perfection, and we floundered this quarter. We were unable to adapt and move quickly enough, and many large deals failed to close on the timelines we expected, resulting in a large portion of our shortfall,” Krishna added.
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