IBM's AI Hardware Boom Strains Software and Consulting Revenue, Shares Slide

IBM warned that its preliminary second-quarter revenue will fall significantly short of Wall Street expectations, sending shares tumbling in premarket trading as the company blamed a tightening enterprise hardware market driven by the AI boom. The technology giant reported expected revenue of $17.2 billion, well below the $17.86 billion consensus estimate compiled by LSEG, according to El-Balad. Adjusted earnings per share of $2.93 also missed the $3.02 forecast, ts2.tech noted, adding that shares dropped roughly 17% in premarket trading ahead of the regular New York session.

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El-BaladIbm warns $17.2 billion revenue trails estimates by 17%ts2.techIBM (NYSE:IBM) Q2 miss exposes the cost of the AI hardware rush

"IBM's warning proves it is now an enterprise software and consulting story, and the whole sector fell with it."

Business Model AnalystIBM Sinks 18%. The Memory Shortage Just Hit Software Budgets

The shortfall stems from large deals failing to close on time as customers shift spending toward AI infrastructure, according to Quartz. Thestack.technology reported that IBM blamed the tight market for enterprise hardware, a dynamic that Business Model Analyst characterized as the "AI memory squeeze" moving beyond consumer gadgets. Adjusted gross profit fell by $8 million from a year earlier even as revenue missed, ts2.tech detailed, underscoring the margin pressure.

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QuartzIBM stock plunged after the company warned its revenue fell short of expectationsthestack.technologyIBM shares fall 25% after revealing huge revenue shortfall

Newsday reported that shares slid before the market open on Tuesday after the preliminary results were disclosed. The extent of the sell-off varied across reports, with thestack.technology noting a 25% decline based on internal numbers, while ts2.tech cited a roughly 17% drop. Money.usnews.com highlighted that the AI boom is squeezing software budgets across the sector, a theme that dragged down other enterprise tech stocks in sympathy.

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NewsdayIBM's stock tumbles as preliminary 2Q results come in below Wall Street's expectationsmoney.usnews.comIBM Warns AI Boom Is Squeezing Software Budgets; Shares Slump in Sector Rout

IBM's preliminary disclosure provides an early glimpse into second-quarter performance ahead of its full earnings release. Analysts will be watching closely for further details on how the company plans to navigate the hardware crunch that is diverting IT spending away from its traditional software and consulting businesses. As Business Model Analyst observed, the memory shortage that started in consumer electronics has now infected enterprise budgets, and IBM's warning may be just the first sign of broader sector pain.