Breaking News | IBM Warns Q2 Software Sales Hit by AI Infrastructure Spending Shift

IBM released preliminary Q2 results showing revenue of $17.2 billion (up 1% year-over-year, below the $17.85B estimate) and adjusted EPS of $2.93 (versus $3.02 consensus). CEO Arvind Krishna stated clients shifted quarterly capex toward servers, storage, and memory to secure supply-constrained infrastructure ahead of expected price increases. The company cited underperformance in its z17 mainframe launch and associated Transaction Processing software stack. Krishna noted IBM did not anticipate the magnitude of the capex reprioritization, which occurred in the last weeks of June. Additionally, clients were distracted by rapidly-evolving, industry-wide cybersecurity concerns during the quarter. The stock dropped 25% on Tuesday, its worst single-day decline in company history dating back to 1961.

• Official Q2 earnings release scheduled for July 22 - management commentary on duration of budget reallocation pressures and z17 pipeline visibility.

• Customer capex patterns in Q3 - whether memory/storage supply constraints ease, allowing budgets to return to software and mainframe purchases.

• Competitor earnings reports from enterprise software and infrastructure vendors - confirmation of whether IBM's budget pressure is sector-wide or company-specific.