IBM profit warning sparks 23% sell-off as hardware margins face pressure

The technology giant's preliminary guidance miss triggered its steepest single-day decline since 1987, signaling deep investor concern over margin erosion in its core infrastructure business.

By Handelsavisen Newsroom · Automated 2026-07-16 15:40 UTC · 1 min read Last updated: 2026-07-16 20:22 UTC

IBM shares plummeted 23% in Tuesday trading, marking the company's most severe single-day decline since the 1987 market crash.

The sell-off was triggered by a preliminary profit warning for the second quarter, which revealed significant headwinds in the company's hardware segment.

MarketWatch reported that hardware costs are "eating everyone's lunch," highlighting the structural pressure on legacy IT providers.

Investors reacted sharply to the news, wiping out billions in market value as concerns mounted over the sustainability of IBM's core infrastructure margins.

The collapse in share price reflects a broader loss of confidence in IBM's ability to maintain profitability amid intensifying competition in the hardware space.

MarketWatch reported that hardware costs are "eating everyone's lunch," highlighting the structural pressure on legacy IT providers.

The warning suggests that IBM's transition to higher-margin software and services is not yet sufficient to offset the drag from its traditional hardware business.