Intro
IBM shares plummeted 25% after CEO Arvind Krishna admitted the company misjudged a rapid corporate shift toward AI spending.
NEW YORK
IBM’s stock took a painful nosedive, plunging 25 percent after chief executive Arvind Krishna admitted the company completely misjudged how fast clients are shifting their cash toward artificial intelligence.
In a surprisingly honest letter to investors, Krishna confessed that IBM “faltered” during the second quarter. The tech giant underestimated how aggressively businesses would hijack their own budgets to buy AI infrastructure, like specialized servers and memory chips. IBM expected a few minor supply chain hiccups, but the reality was far more brutal.
As customers scrambled to buy up hardware ahead of predicted price hikes, IBM’s sales teams failed to adapt. Krishna noted that the sudden budget shifts, combined with global cybersecurity worries, distracted clients. This deadly mix caused several massive deals to fall through at the very last minute.
While IBM’s overall revenue crept up by just 1 percent to $17.2 billion, its infrastructure sector suffered a painful 7 percent drop. The damage was heavily felt in IBM’s mainframe and transaction software divisions, which performed much worse than anticipated. On the bright side, software sales managed a 5 percent bump, and Krishna insisted that IBM is still betting big on future tech like quantum computing and AI.
The company is still polishing its final financial paperwork, with the full, official quarterly report scheduled to drop on July 22. For now, leadership is left picking up the pieces after a very expensive wake-up call.