IBM Stock Plunges 25% After Disastrous Q2 Earnings

IBM's stock price plummeted by 25% on July 14, wiping out $68 billion of its market capitalization in a single day. The massive decline followed the company's CEO Arvind Krishna's announcement that IBM's Z performance had fallen short of expectations. In a letter to shareholders, Krishna attributed the shortfall to customers' 'capex reprioritization,' stating that IBM did not adapt quickly enough and numerous large deals failed to close.

The sudden drop in IBM's stock price raised concerns among investors about the company's financial health. Hagens Berman, a national shareholder rights firm, has launched an investigation into potential violations of U.S. securities laws by IBM. The firm is focusing on the propriety of IBM's statements about its flagship mainframe computer, IBM Z.

According to the report, IBM had assured investors that it expected 5% revenue growth in 2026, but its actual Q2 revenue was up only 1%. Infrastructure revenue declined by 7%, which contributed to the overall disappointment. The investigation is also looking into whether IBM had information about large deals being unlikely to close during the second quarter.