IBM Shares Crash 25% In Record Single-Day Fall After Q2 Revenue Warning

IBM shares plunged approximately 25% on 14 July 2026, erasing roughly $70 billion in market value in a single session and marking the steepest one-day fall in the company's history, surpassing losses recorded during the 1987 market crash. The selloff came after IBM issued an unexpected warning that its second-quarter results would fall short of Wall Street expectations.

The company now expects second-quarter revenue of approximately $17.2 billion, below analyst forecasts of nearly $17.9 billion. Adjusted earnings are projected at $2.93 per share, also missing estimates, after weaker-than-expected performance across both its software and infrastructure businesses.

AI Spending Shifted Customer Priorities

IBM's chief executive said enterprise customers had redirected technology budgets towards AI infrastructure, including servers, storage and memory chips, at the expense of software purchases. Many companies delayed or cancelled software spending to fund AI infrastructure build-outs, and IBM admitted it had underestimated how quickly and significantly this shift would play out during the quarter.

Mainframe Rollout And Deal Slippages

IBM's z17 mainframe launch, a key product cycle expected to drive infrastructure revenue, failed to generate the momentum the company had anticipated. Several large enterprise deals that were expected to close during the quarter slipped past the period, compounding the revenue shortfall. IBM acknowledged execution missteps, saying management did not respond quickly enough to rapidly changing market conditions.

Wider Tech Sector Rattled

IBM's warning sent ripples through the broader enterprise software sector. Shares of Microsoft, Salesforce, ServiceNow and Intuit all declined as investors reassessed growth outlooks for software companies. The results reinforced concerns that the AI boom is currently benefiting chipmakers and hardware suppliers more than software vendors, and that enterprise IT budgets may remain skewed towards AI infrastructure for some time.

Despite the poor quarter, IBM maintained confidence in its broader direction. The company highlighted continued growth at Red Hat, expanding AI partnerships and plans to invest more than $10 billion in quantum computing over the next five years. Management said it remained committed to its transformation strategy even as it worked through near-term headwinds from shifting customer spending patterns.

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