IBM stock plunges 23% as it says clients are spending less on its AI products

IBM shares plunged nearly 23% in premarket trading after the company reported worse-than-expected quarterly results and said clients are cutting spending on its AI infrastructure and software products. CEO Arvind Krishna acknowledged the company "faltered" in the second quarter, citing delayed large deals and customers reprioritizing capital expenditures ahead of expected price increases. The drop reflects weakening demand for IBM's AI offerings amid a broader slowdown in enterprise tech spending.

IBM shares https://www.businessinsider.com/category/ibm tanked in premarket trading on Tuesday after the tech giant reported worse-than-expected results and said customers were cutting back spending on its AI infrastructure and software products. The company's stock was set to open down almost 23% as of around 7:45 a.m. ET, an hour and a half before the market open. Having closed at $290 per share on Monday, the stock was set to open at $224 on Tuesday. The precipitous drop in IBM's stock https://www.businessinsider.com/ai-agent-saving-ibm-consulting-leader-hours-every-week-2026-4 came after it reported a second-quarter "shortfall" in the performance of its software and infrastructure division, linked to the rollout of its new z17 mainframes, which are designed to process AI workloads. "This quarter we faltered," IBM CEO Arvind Krishna said in a letter to investors released Tuesday. "We did not adapt and move quickly enough, and numerous large deals failed to close on the timelines we expected, driving the majority of our shortfall." Krishna said that a major factor in the lower-than-expected performance was clients cutting spending on IBM products and reprioritizing their capex spend on "servers, storage, and memory purchases" ahead of "expected price increases." IBM reported revenues of $17.2 billion across the company in the second quarter, up 1%, but behind analyst expectations. Revenues in the infrastructure division were down 7%. This is a developing story.