IBM’s stock drops sharply after the company issues a profit warning and reduces parts of its outlook, citing a sudden change in how customers allocate spending toward AI-related infrastructure. Multiple outlets report that IBM expects to miss near-term market expectations for its second quarter, with preliminarily reported revenue around $17.2 billion—roughly up about 1% year over year but below analysts’ forecasts—and weaker profit performance than expected. Several sources link the shortfall to customer capex reprioritization: buyers move spending toward servers, storage, and memory and seek to secure supply-constrained hardware, which in turn delays or disrupts software and services deal timelines.
IBM also points to pressure in its infrastructure business, including significant weakness in mainframe (IBM Z) revenue. While some coverage emphasizes the immediate impact on software contracts and deal closures, other reporting includes management’s acknowledgment that IBM’s own execution faltered, with the company saying it did not adapt quickly enough. Despite the warning, IBM and some reports highlight resilience in parts of the business, including Red Hat and portions of its distributed infrastructure, while reiterating longer-term commitments tied to AI and quantum computing.
