Arvind Krishna attributes IBM's record-breaking stock plunge to shifting enterprise IT budgets toward AI hardware and memory.
Arvind Krishna, CEO of International Business Machines Corporation, reported that the company's stock experienced its worst single-day fall in recent history after preannouncing second-quarter results that missed analyst expectations. The shares dropped 25.2% in one session, erasing approximately $68 billion in market value. Krishna noted that customers redirected capital spending toward supply-constrained servers and memory to prepare for AI-driven demand, which pressured IBM's mainframe and software segments. While the company's software revenue grew by 5%, infrastructure fell by 7%, leading to a revenue figure of $17.2 billion, which was $660 million below the consensus. The sell-off prompted Oppenheimer to downgrade the stock from "Outperform" to "Perform" and scrap its $350 price target. Despite the immediate crash, many analysts maintain a constructive outlook, viewing the miss as an execution stumble rather than structural decay. The company continues to push forward with its generative AI book of business and new Power Systems hardware as it seeks to recover its valuation.