IBM shares slumped 17% in premarket trading on Tuesday after the company reported preliminary second-quarter revenue forecasts that fell short of Wall Street and analyst expectations. The results triggered a broader plunge in shares across software and IT services companies, reigniting questions over the prospects of the sector.
The company attributed the miss to customers shifting their spending toward hardware purchases. The CEO blamed the shortfall on weakness in the software and infrastructure business as clients prioritized spending on AI infrastructure, including chips, servers, storage, and memory.
IBM further warned of weakness in the latest quarter, citing shifts in supply chains and a number of large deals that failed to close on the timelines anticipated.