IBM shares plunge over 23% as preliminary quarterly results miss forecasts

Shares of US tech company IBM fell more than 23% in premarket trading Tuesday after its preliminary second-quarter revenue and earnings came in below market expectations.

IBM reported adjusted earnings of $2.93 per share on revenue of $17.2 billion for the three months ended in June.

Revenue rose 1% from a year earlier, while adjusted earnings per share increased 5%, but both figures fell short of analysts' forecasts.

Software revenue increased 5% year on year, consulting revenue was unchanged, and infrastructure revenue declined 7%, according to the preliminary results.

Chief Executive Officer Arvind Krishna said the weaker-than-expected performance was partly due to clients redirecting capital spending toward servers, data storage equipment, and memory chips.

Krishna said customers shifted spending during the final weeks of June to secure supply-constrained infrastructure ahead of expected price increases.

While IBM had anticipated some supply chain effects, "we did not anticipate the magnitude of the capex reprioritization," he said in a letter to investors.

Krishna also acknowledged execution problems within the company, saying several large transactions were not completed within the expected timeframe and accounted for most of the earnings shortfall.

"These conditions require our teams to execute perfectly, and this quarter we faltered," he said.

IBM said weaker performance in its mainframe-related infrastructure and transaction-processing software businesses also weighed on results.

The company reported an adjusted gross profit margin of 59.4%, down 70 basis points from a year earlier, while free cash flow for the first half of 2026 totaled $4.8 billion.