IBM loses quarter of its value as tech giant’s shares plunge and profits falter

2026-07-14 · Source: AI (artificial intelligence) | The Guardian · Field: Finance & Economics — Capital Markets & Investment Management, Corporate Finance & Treasury, Economic Analysis & Policy · Depth: Fundamental Awareness, quick

Summary

IBM's shares plummeted over 25% on Tuesday, following a disappointing preliminary second-quarter 2026 earnings report and a profit warning. The tech giant reported revenue of \$17.2bn, a mere 1% year-over-year increase, significantly below analysts' forecast of \$17.86bn. Adjusted earnings per share are expected at \$2.93, missing the \$3.02 estimate. This downturn was attributed to a rapid shift in corporate spending, with customers prioritizing datacentre infrastructure and cybersecurity hardware for AI development, driven by anticipated price increases and new AI hacking threats. This shift diverted capital from IBM's higher-margin mainframe software, triggering a broader selloff across the software sector, impacting companies like Microsoft, ServiceNow, Salesforce, and Intuit, which saw declines of 3% to 5%.

Key takeaway

For investors evaluating tech sector exposure, IBM's profit warning signals a critical shift: corporate capital expenditure is rapidly moving from traditional software to AI infrastructure and cybersecurity. You should scrutinize software companies' ability to adapt to this hardware-first spending trend, as sustained demand for servers and chips could continue to pull budgets away from higher-margin software. Reassess your portfolio's resilience to this rebalancing of IT priorities.

Key insights

Corporate spending is rapidly shifting towards AI infrastructure and cybersecurity, diverting funds from traditional software and impacting major tech firms.

Principles

• AI infrastructure demand reallocates IT budgets.
• Anticipated price hikes drive immediate hardware purchases.
• AI advancements increase cybersecurity spending.

In practice

• Secure AI infrastructure ahead of price increases.
• Re-evaluate software offerings against AI hardware demand.
• Monitor corporate capex shifts for market signals.

Topics

• IBM
• AI Infrastructure
• Corporate Spending
• Software Sector
• Cybersecurity
• Stock Market

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Editorial summary, takeaway, and curation by AIssential. Original article published by AI (artificial intelligence) | The Guardian.