IBM Shares Plummet 24% After Initial Results Disappoint Wall Street
IBM shares fell 24% after the company reported disappointing second-quarter results, citing a shift in customer spending away from mainframes toward AI infrastructure. The company struggled to adapt to the rapid surge in demand for memory chips and servers, which diverted budget from its core high-margin products.
Why it matters
The decline highlights the intense pressure on legacy tech firms to pivot toward AI-driven hardware demands while managing supply chain volatility.
Shares in IBM plunged 24 percent on Tuesday after the US tech giant released disappointing preliminary second-quarter results, blaming a shift in spending by customers due to expected higher prices for memory chips and other AI-related infrastructure."We did not adapt and move quickly enough," IBM CEO Arvind Krishna said in a letter to investors. The company said revenue for the three months ending in June came in at $17.2 billion, up just one percent.A global rush by tech companies to build out artificial intelligence infrastructure has sent demand for servers, memory chips and storage soaring, driving up prices and creating supply shortages across the industry.IBM said that toward the end of June, many of its big corporate customers rushed to buy that hardware to get ahead of expected price increases. That rush pulled spending away from IBM's higher-margin mainframe computers…
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