IBM shares experienced a historic decline on Tuesday, dropping 25.2% to around $217, marking the company’s largest single-day loss in 115 years. This plunge, which erased approximately $67 billion from its market capitalization, came after CEO Arvind Krishna reported disappointing second-quarter results, citing failures to adapt to rising chip costs and shifting customer spending toward AI hardware.
Krishna indicated that while IBM anticipated some supply chain disruptions, the degree of the shift in capital expenditures was unexpected. Clients adjusted their budgets, prioritizing AI infrastructure over software solutions, which led to significant unclosed deals and a cash shortfall. He emphasized the necessity for IBM to navigate these challenges effectively.
Investors are awaiting further updates, with IBM scheduled to announce its financial results on July 22, and Wall Street forecasts modest growth in revenue and earnings. The disruption caused by the growing AI infrastructure has also affected other software companies, heightening concerns over the automation of tasks traditionally performed by them.
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