IBM shares fall more than 17% on second-quarter earnings warning
IBM (IBM) is in focus after the company warned that second-quarter earnings came in short of expectations, sending shares down more than 17% in the session. The chief executive pointed to weakness in the software and infrastructure segments, attributing the gap to clients who shifted spending toward hardware purchases. The next confirmable milestone is the formal quarterly report, where IBM will attach hard numbers to the pre-announcement.
Key takeaways
- IBM shares fell more than 17% in a single session after the company warned that second-quarter earnings came in short of expectations.
- IBM's CEO attributed the shortfall to weakness in the software and infrastructure segments as enterprise clients shifted spending toward hardware purchases.
- The warning was a pre-announcement that named the affected business lines and the mechanism but did not attach a specific earnings figure to the miss.
- The steep single-session decline reflects how firmly the software contribution had been priced in heading into the quarter.
- The precise magnitude of the shortfall will be disclosed in the formal second-quarter earnings report.
IBM (IBM) is in focus after the company warned that second-quarter earnings came in short of expectations, sending shares down more than 17% in the session. The chief executive pointed to weakness in the software and infrastructure segments, attributing the gap to clients who shifted spending toward hardware purchases. The next confirmable milestone is the formal quarterly report, where IBM will attach hard numbers to the pre-announcement.
Where the shortfall landed
IBM's chief executive was specific about the mechanism: software and infrastructure fell short because enterprise clients moved budget toward hardware during the quarter. The setup the market had been pricing assumed those segments would deliver. They did not.
That spending rotation is the kind of development that recalibrates expectations across IBM's segment structure. Hardware and software carry different economics in IBM's reporting mix. When clients redirect spending toward hardware, the revenue composition shifts away from the segments that tend to carry the heavier margin weight in consensus models. The market's response, a decline of more than 17% in a single session, reflects how firmly priced-in the software contribution had been going into the quarter.
Reading the session
A drop of this scale on a pre-announcement, before the actual quarterly print, says something about how investors had positioned. The setup heading into the report was built around what the software and infrastructure lines were expected to produce. Management's disclosure that those segments came up short because clients moved spending elsewhere reset the tape in a single session.
IBM has not attached a specific earnings figure to the shortfall in its warning. The pre-announcement names the business lines and describes the mechanism behind the miss. The precise magnitude of the shortfall waits for the formal release.
What to watch next
The second-quarter earnings report is where the setup gets resolved. That filing will put actual results alongside consensus and will show whether the software and infrastructure weakness is a one-quarter shift or a sustained change in how enterprise clients are allocating technology budgets. The CEO has explained the direction of the client movement. The scale of it arrives with the print.
Related reading
Filed by the macro desk of MarketPR on July 21, 2026. Source: MarketPR. Indicative figures are not investment advice.