IBM Shares Plunge After Q2 Preannouncement Raises Doubt Over Software Momentum

Management says customers redirected IT budgets to scarce AI servers and storage, and investors now look to the July 22 earnings call for answers about timing and targets.

Overview

IBM disclosed preliminary second-quarter results that fell short of expectations, reporting $17.2 billion in revenue and $2.93 in adjusted EPS while shares dropped sharply.
Software revenue slowed to 5% growth from 8% in the prior quarter and infrastructure revenue fell 7%, outcomes that missed Wall Street forecasts and weakened the AI revenue case.
CEO Arvind Krishna told investors that many enterprise clients shifted planned spending into constrained AI hardware such as servers, memory, and storage to secure capacity.
Red Hat was a relative bright spot with roughly 11% revenue growth, but its strength did not make up for broader softness across IBM’s software portfolio.
Markets and analysts are focused on the July 22 earnings call for detail on whether the shortfall represents deal timing or a deeper change in enterprise IT budgets and on IBM’s ability to meet its full‑year software growth targets.