IBM's 'ugly moment': Worst fall since 1987, $69 bn wiped out — Why did stock crash 25%?
IBM shares plummeted 26% following a warning that corporate technology spending is shifting away from software toward AI-related infrastructure. This significant market decline reflects broader industry concerns regarding the impact of AI on traditional software business models.
Why it matters
The crash highlights a major capital expenditure pivot in the tech sector, signaling that AI infrastructure demand is currently cannibalizing budgets for traditional enterprise software.
A $69 billion wipeout and worst fall in nearly 40 years - IBM’s share price on Tuesday crashed 26% in trade in a sign of how the technology sector is rebalancing with the growth of artificial intelligence. Shares of IBM plunged 25% on Tuesday, with the company seeing a steeper one-day decline than it experienced during the 1987 "Black Monday" market crash. The weakness also spread to other software stocks.IBM lost about $69 billion from its market capitalisation of $272.78 billion. Shares of Microsoft, ServiceNow, Salesforce, and Intuit also declined between 2% and 5%.IBM's business spans mainframe computers, enterprise software and information technology consulting services for large corporations and government clients.Why did IBM share price crash so badly?IBM said it had "faltered" in responding to a sharp shift in corporate technology spending away from software and towards data-centre infrastructure, warning that the change would significantly affect its second-quarter earnings.
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