International Business Machines Corporation (NYSE: IBM) shares fell by roughly 25% on Tuesday, July 14, 2026, after the company released preliminary second-quarter results that came in below Wall Street expectations. IBM said preliminary revenue reached approximately $17.2 billion, versus analyst estimates of roughly $17.86 billion to $17.9 billion. The company has not yet released its complete second-quarter report, which remains scheduled for July 22, 2026.
Key Facts
- IBM shares fell approximately 22% to 25% during Tuesday’s trading session, according to multiple financial outlets.
- Preliminary revenue came in at about $17.2 billion, up 1% year over year.
- Wall Street had expected revenue of roughly $17.86 billion, according to FactSet.
- Preliminary adjusted (non-GAAP) earnings were $2.93 per share, versus an analyst consensus of about $3.01 per share.
- IBM cited a shortfall in its Z mainframe business and a shift in customer spending toward AI-related hardware.
- IBM’s complete second-quarter earnings report and conference call are scheduled for July 22, 2026.
Why Did IBM Stock Crash?
IBM’s preliminary second-quarter revenue and adjusted earnings both came in below Wall Street forecasts, driven largely by weaker-than-expected Software and Infrastructure performance. Management said clients unexpectedly shifted spending in late June toward servers, storage and memory to secure AI-related hardware ahead of anticipated price increases, pulling budget away from IBM’s mainframe and software business. The scale of that shift caught investors off guard, triggering a sharp single-day sell-off.
What Happened to IBM Stock?
IBM shares dropped sharply after the company issued a preliminary update on its second quarter before markets fully digested the news. Reports on the size of the decline varied slightly by outlet and by the time of measurement during the trading day, with figures ranging from about 22% in early trading to roughly 25% as the session progressed. Some market commentators noted the move was on pace to be IBM’s steepest single-day percentage decline since October 19, 1987, the “Black Monday” market crash, when IBM shares fell about 23.7%. That historical comparison has been reported by several financial news outlets, including CNN Business and Forbes, though it should be understood as a reported observation about the size of the move rather than a confirmed final closing figure, since intraday percentages can shift before the market closes.
Why Did IBM Stock Crash?
IBM said it was still finalizing its full quarterly financial reporting when it issued the preliminary figures. The company disclosed selected results through a letter from Chief Executive Officer Arvind Krishna to investors and in a related regulatory filing, rather than through a complete earnings report.
What Did IBM Report?
According to IBM’s preliminary disclosure, second-quarter revenue was approximately $17.2 billion, an increase of about 1% from a year earlier. Preliminary operating (non-GAAP) earnings per share were $2.93, while GAAP diluted earnings per share were $2.27, down about 2% year over year. IBM reported a GAAP gross profit margin of 57.7%, down roughly 100 basis points from the prior year, and an operating gross margin of 59.4%, down about 70 basis points.
How Did IBM Perform Versus Wall Street Expectations?
Analysts polled by FactSet had expected revenue of about $17.86 billion and adjusted earnings of roughly $3.01 per share. IBM’s preliminary figures fell short of both estimates, which is widely regarded by market analysts as the central reason behind the stock’s sharp decline. It is important to note these are analyst estimates rather than IBM’s own guidance, and different data providers may report slightly different consensus figures.
Why Are Customers Shifting Technology Spending?
Krishna said that in the final weeks of June, enterprise clients redirected planned technology spending toward servers, storage, and memory components. He attributed this shift to efforts by customers to secure supply-constrained infrastructure, much of it tied to surging artificial intelligence data-center demand, before anticipated price increases. IBM said it had anticipated some supply-chain-related disruption but did not expect the scale of the spending reprioritization that occurred.
What Did IBM Management Say?
In his letter to investors, Krishna described the quarter’s Software and Infrastructure performance as falling short of the company’s own expectations. He said IBM had planned for a low-single-digit decline in Infrastructure revenue tied to the wrap-up of its z17 mainframe launch cycle, but that the actual shortfall in the Z platform and its associated Transaction Processing software was more severe than anticipated. Krishna acknowledged the company “did not adapt and move quickly enough” to the shift in customer buying patterns, according to his statement.
Which IBM Business Segments Were Weak?
IBM’s Infrastructure segment revenue declined about 7% for the quarter, the primary driver of the overall shortfall. Software revenue rose approximately 5%, with Red Hat reportedly up around 11%, while Consulting revenue was roughly flat, up about 1% at constant currency. The Infrastructure weakness, tied largely to mainframe and related software performance, was the segment most responsible for the preliminary miss.
Did the IBM Drop Affect Other Technology Stocks?
IBM’s decline coincided with weakness across parts of the software sector. Shares of several enterprise software and technology companies traded lower the same day, and a widely tracked software-sector exchange-traded fund also declined. Market commentators described the reaction as uneven across the sector rather than a broad market-wide sell-off, with some technology names largely unaffected. At least one Wall Street firm, HSBC, reportedly downgraded its rating on IBM stock following the announcement, while other firms had not yet updated their ratings as of Tuesday.
What Happens When IBM Reports Full Earnings?
IBM’s complete second-quarter 2026 results and an accompanying conference call remain scheduled for July 22, 2026. The full report is expected to include finalized GAAP and non-GAAP figures, additional segment detail, updated full-year guidance, and management commentary addressing the preliminary shortfall in greater depth. Investors and analysts are widely expected to focus on whether the Software and Red Hat businesses regain momentum and whether the mainframe-related weakness was a temporary disruption or a longer-lasting trend.
What Should Investors Watch Next?
Market participants are likely to watch for analyst rating and price-target revisions in the days following the preliminary release, additional management commentary ahead of the July 22 report, and confirmation of final, audited second-quarter figures. A falling stock price reflects investor reaction to the preliminary disclosure and does not by itself indicate that IBM is insolvent, bankrupt or facing an inability to continue operations; the company continues to generate revenue and operating cash flow, according to its preliminary disclosure.
Brief Timeline
- April 2026: IBM had previously guided for a low-single-digit Infrastructure revenue decline tied to the z17 mainframe cycle.
- Late June 2026: IBM said clients shifted spending toward AI-related hardware ahead of anticipated price increases.
- July 14, 2026: IBM released preliminary second-quarter results; shares fell sharply during the trading session.
- July 22, 2026: IBM’s complete second-quarter earnings report and conference call are scheduled.
Final Summary
IBM’s stock fell sharply on July 14, 2026, after the company disclosed preliminary second-quarter revenue and adjusted earnings that missed Wall Street expectations. Management attributed the shortfall primarily to weaker mainframe and Infrastructure performance, as enterprise clients redirected spending toward AI-related hardware. IBM’s complete quarterly results are due July 22, 2026, and will offer a fuller picture of the company’s performance and outlook.
Frequently Asked Questions
Q1. Why did IBM stock fall?
IBM stock fell after the company released preliminary second-quarter 2026 results showing revenue and adjusted earnings below Wall Street estimates. Management pointed to weaker-than-expected Infrastructure and mainframe performance, along with a shift in customer spending toward AI-related hardware such as servers, storage and memory, as the main drivers of the shortfall.
Q2. How much did IBM stock drop?
Reports indicate IBM shares fell by roughly 22% to 25% during Tuesday’s trading session, with the exact figure varying by outlet and by the point in the trading day when it was measured. Investors should check a real-time financial data source for the most current, verified figure, including the official closing price.
Q3. What revenue did IBM forecast?
IBM’s preliminary disclosure put second-quarter revenue at approximately $17.2 billion, an increase of about 1% from the prior year. That compares with a Wall Street consensus estimate of roughly $17.86 billion, according to FactSet, representing a notable shortfall versus expectations.
Q4. Is IBM’s full earnings report available yet?
No. As of this preliminary disclosure, IBM had not yet released its complete, audited second-quarter results. The company’s full earnings report and conference call remain scheduled for July 22, 2026, when additional financial detail and updated guidance are expected.
Q5. Does IBM’s stock decline mean the company is failing?
Not necessarily. A sharp one-day stock decline reflects how investors are reacting to disappointing preliminary results and a weaker outlook, not a statement about IBM’s solvency. IBM reported continued revenue growth and positive operating cash flow in its preliminary disclosure, and a falling share price alone does not indicate bankruptcy or permanent financial impairment.
