International Business Machines (NYSE:IBM) delivered a strong third-quarter earnings report, beating expectations on both revenue and earnings. The company reported revenue of $17.1 billion, surpassing the consensus estimate of $16.8 billion, while adjusted earnings per share came in at $2.95, beating the $2.86 estimate. This performance led to an initial 7.3% surge in after-hours trading.
The euphoria was short-lived, however. During the earnings call, CEO Arvind Krishna warned that corporate customers are growing concerned about the real returns on their AI spending. He noted that clients are 'getting worried if some of the AI spending [is] completely out of control with no real return.' This candid assessment caused the stock to reverse course, ending with a 4.6% after-hours loss.
The market reaction was not isolated to IBM. Tesla (NASDAQ:TSLA) also reported earnings the same night, casting a chill across extended trading with its own guidance. Tesla's forecast hinted at cooler data center capital expenditures, weighing on the company's energy business and spooking AI investors. Infrastructure heavyweights like Nvidia, Oracle, and CoreWeave began bleeding red around 6:00 p.m. ET, the moment the call adjourned.
The combined warnings from two industry titans sent a clear signal to the market. When an industry leader like IBM highlights customer concerns about unproven tech, the rest of the market tends to listen. The reaction was even sharper when two titans issued similar warnings in unison.