IBM Stock Crashes as Revenue Warning Sends Shockwaves Through Tech Sector
IBM's stock price plummeted more than 20% in premarket trading on Tuesday, July 14, following a surprise revenue warning. The company revealed that its second-quarter revenue of $17.2 billion would miss Wall Street estimates.
The revenue shortfall was attributed to a late shift in client spending towards servers, storage, and memory chips, as well as industry-wide cybersecurity concerns that distracted customers during the quarter. Software revenue grew 5%, while infrastructure sales fell 7% and consulting stayed roughly flat.
IBM's CEO Arvind Krishna acknowledged that clients redirected capital budgets towards hardware ahead of expected price increases. The warning marks a significant reversal for the company, which had seen its stock gain 21% over three months through Monday's close.