IBM Stock Collapses Toward $200 as Earnings Warning Shows Clients Shift Spending Away From Software

Quick overview

IBM shares plunged as weakening software demand and rising AI infrastructure costs exposed growing cracks in enterprise technology spending, dragging Salesforce, Adobe, Intuit, and ServiceNow sharply lower.

IBM Stock Crashes as Software Spending Slows

International Business Machines Corp. shares came under heavy selling pressure on Tuesday, with IBM stock tumbling nearly 25% and falling toward the important $215 support level as investors reacted to disappointing preliminary second-quarter expectations.

The sharp decline has placed the $200 level firmly in focus and triggered a broader selloff across the software sector.

IBM Chart Weekly – The Trend Is Turning Bearish

The move also weighed heavily on the Dow Jones Industrial Average, with IBM’s collapse removing more than 400 points from the blue-chip index during early trading.

AI Infrastructure Spending Hits Software Budgets

According to IBM Chief Executive Officer Arvind Krishna, enterprise customers are increasingly redirecting spending toward expensive AI infrastructure projects, including servers, memory products, and storage systems, leaving less room in budgets for software purchases.

Krishna told investors that IBM’s business “faltered” during the second quarter as customers reduced software spending to fund investments in AI hardware, where prices have surged significantly in recent months.

The warning has intensified concerns that the AI investment boom may be cannibalizing other areas of enterprise technology spending rather than creating entirely new demand.

Revenue and Earnings Forecast Miss Expectations

IBM expects second-quarter revenue of approximately $17.2 billion, representing annual growth of just 1% but falling below analyst expectations of $17.8 billion.

The company also forecast earnings per share of $2.27, significantly below Wall Street estimates of $2.60 per share.

Adjusted earnings are expected to reach $2.93 per share, slightly below consensus forecasts of $2.98.

Software Sector Slides Ahead of Earnings

IBM’s warning quickly spread across the broader software industry.

Shares of Salesforce, Adobe, Intuit, and ServiceNow all moved lower as investors reassessed whether slowing software budgets could become a wider trend across the sector.

IBM is scheduled to officially release its second-quarter 2026 financial results on July 22, with investors expected to closely scrutinize management’s outlook for enterprise spending and the broader impact of the AI infrastructure investment cycle on software demand.

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Skerdian Meta

Lead Analyst

Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.

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