IBM shares tumbled more than 17% in premarket trading after the technology giant disclosed preliminary second-quarter results that fell short of Wall Street expectations.
The company reported adjusted earnings per share of $2.93, a figure that failed to offset investor concerns over the broader revenue miss.
The sharp sell-off weighed on broader Wall Street indices, signaling deepening anxiety about the near-term profitability of legacy tech firms navigating the artificial intelligence transition.
The revenue shortfall stems from a structural shift in customer behavior.
Enterprises are prioritizing capital expenditure on AI infrastructure—specifically servers, storage, and memory—over the software and services contracts that have historically underpinned IBM’s growth narrative.
This reallocation of spending is creating a headwind for IBM’s hybrid cloud and consulting divisions, which had been positioned as primary beneficiaries of the AI boom.