IBM shares experienced their worst single-day decline in the company's 115-year history on Tuesday, plummeting 25% after the tech giant released preliminary second-quarter results that fell significantly short of market expectations. The sell-off erased approximately $67 billion in market capitalization, pushing the stock to a closing price of around $217. This historic drop surpassed the company's previous record decline of 23% during the 1987 Black Monday market crash.
In a candid letter to investors, IBM Chairman and CEO Arvind Krishna acknowledged that the company had "faltered" during the quarter. He explained that IBM failed to adapt quickly enough to a sudden, aggressive shift in corporate spending. While the company had anticipated some supply chain disruptions, it underestimated the extent to which enterprise clients would prioritize purchasing physical AI hardware—such as servers, storage, and memory chips—over traditional software and consulting services.
This shift in capital expenditure was driven by businesses racing to secure supply-constrained infrastructure ahead of expected price increases. Consequently, several large deals that IBM expected to close by the end of June failed to materialize on time. The company reported preliminary quarterly revenue of $17.2 billion, missing the consensus estimate of $17.86 billion, while adjusted earnings per share reached $2.93, falling short of the $3.02 projection.
The impact of this announcement rippled across the broader technology sector, as investors grew concerned about the sustainability of software spending in an era dominated by AI infrastructure demand. Other major software and IT services firms saw their shares decline as the market reassessed the immediate financial outlook for the industry. IBM plans to provide further details and discuss its full-year expectations during a scheduled conference call on July 22, 2026.