Breaking News | IBM Crashes 17% on $2.93 EPS Miss as June Budget Shift Hits Software

IBM reported preliminary Q2 adjusted EPS of $2.93 on revenue of $17.2 billion, missing consensus estimates of $3.01 and $17.86 billion. CEO Arvind Krishna attributed the shortfall to late-June client behavior: customers prioritized spending on supply-constrained servers, storage, and memory ahead of expected price increases, starving software budgets. Krishna acknowledged internal execution failures, stating numerous large deals failed to close on expected timelines. The infrastructure segment performed worse than internal forecasts. The stock fell more than 17% in premarket trading, marking its steepest one-day decline in nearly four decades.

Whether the capex reallocation toward AI infrastructure persists beyond Q2, potentially suppressing enterprise software spending sector-wide. Track Q3 software booking trends and whether IBM's large deal pipeline stabilizes. Monitor competing infrastructure vendors for signs of similar budget cannibalization.