IBM shares plunge 23 pc in pre-market, wiping out $55 billion in market value
Mumbai, July 14
IBM shares plunged 23 per cent in pre-market trading on the New York Stock Exchange on Tuesday after the technology giant reported preliminary second-quarter results that fell short of market expectations, triggering a broad sell-off across software and IT services stocks.
The sharp decline erased nearly $55 billion from IBM's market capitalisation and, if sustained through the trading session, would mark the company's steepest intra-day fall since the 1980s.
International Business Machines Corp. said its preliminary second-quarter sales missed analysts' expectations, citing weakness in its software and infrastructure businesses.
The company attributed the disappointing performance to customers redirecting technology budgets toward artificial intelligence (AI) infrastructure, including chips and servers, at the expense of traditional software spending.
IBM's infrastructure business was particularly affected, with sales from the division declining 7 per cent during the quarter.
The company noted that it is still reviewing its financial statements and that the final results could differ slightly from the preliminary figures.
The weak update weighed heavily on the broader technology sector, dragging down shares of several major software companies in pre-market trading. Oracle fell 2.3 per cent, while ServiceNow declined 6.8 per cent. Accenture dropped 8.5 per cent and Adobe slipped 4.8 per cent, while Cognizant was down 7 per cent.
The sell-off also extended to Indian IT companies listed in the US. American Depository Receipts (ADRs) of Infosys were trading nearly 9 per cent lower in pre-market trading, while Wipro ADRs declined around 3 per cent.
Despite the weakness in individual technology stocks, Nasdaq futures recovered some ground after the tech-heavy Nasdaq Composite had fallen 1.6 per cent in the previous trading session.
IBM's results underscore the ongoing shift in enterprise technology spending, as businesses continue to prioritise investments in AI infrastructure over conventional software and legacy IT systems, creating pressure on companies with significant exposure to traditional technology segments.
— IANS
Reader Comments
This is massive! $55 billion wiped out in pre-market alone. As an Indian investor with some exposure to US tech stocks through mutual funds, this makes me very nervous. But it also shows how quickly things can change in the tech world. AI is eating the traditional software business, just like digital ate film photography. Our Indian IT firms need to pivot fast towards AI services or risk a similar fate. 😰
Yaar, it's not just IBM. Look at the ripple effect on Infosys, Wipro, and Cognizant. Our IT stocks are taking a hit too. But let's be honest—it's not entirely unexpected. The entire IT sector has been under pressure with clients cutting back on discretionary spending. This IBM news is just the canary in the coal mine for traditional IT services. Hope our companies have enough cushion to weather this storm. 🤞
From a global perspective, this is fascinating. IBM has been trying to reinvent itself for decades but keeps getting caught in the crossfire of tech transitions. The shift to AI infrastructure is real—I work in IT procurement and every conversation now starts with "how does this help with AI?" Sad for IBM employees, but this is capitalism at work. Companies that don't adapt get punished.
As someone who works in the Indian IT industry, this is a wake-up call. We've been riding the wave of cost-efficient software services for years, but AI is changing the game. Clients want intelligent automation, not just coding manpower. Our companies need to invest heavily in reskilling employees for AI, cloud, and data analytics. The days of 'body shopping' are numbered. Time to evolve or perish. 💪
Reading this from the UK. Our pension funds have significant holdings in US tech stocks, so this is concerning for many of us. But I think the market is overreacting a bit. IBM's problems are mostly about their specific legacy issues—mainframes, traditional software—not the entire sector. AI companies like Nvidia are booming. It's a tale of two tech worlds right now.
We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.