Summary:
- Wall Street Desks Stunned
- IBM Shares Crash Most On Record, Exceeding Dot Com & 1987 Crashes
- CEO Arvind Krishna Blamed Preliminary 2Q Results on "Shifting" Customer CapEx Spending
IBM's surprise second-quarter warning blindsided traders Tuesday morning, raising new concerns that enterprise technology budgets are being redirected toward AI infrastructure at the expense of traditional software and IT services.
Shares plunged 24% in the first 20 minutes of New York trading. Should those losses hold through the close, IBM would suffer its largest one-day crash on record, based on Bloomberg trading data going back to 1968.
Here's what Wall Street's top desks are saying in first takes:
UBS analyst Robert Ruple:
The big news this morning was a surprising negative preannouncement by IBM, down 22%, with Q2 sales of $17.2 bn versus $17.8 bn expected and EPS of $2.93 versus $3.02. Citing unanticipated capex reprioritization impacting client buying patterns with numerous large deals failing to close on time, cybersecurity distractions and some supply chain-related impact where they saw clients shift their quarterly capex spend toward servers, storage, and memory purchases to secure supply-constrained infrastructure (thanks to AI boom) ahead of expected price increases. This redirection of budgets towards AI has been a topic that Karl Keirstead/team have been
