IBM projected $17.2 billion in preliminary second-quarter revenue, missing the $17.86 billion Wall Street estimate as customers shifted spending toward AI infrastructure. The forecast also pointed to adjusted earnings per share of $2.93, below the $3.02 estimate compiled by LSEG, and sent IBM shares down 17% in premarket trading.
Arvind Krishna on July 14
Arvind Krishna told investors the company had faltered in adapting quickly enough to evolving market conditions. He also said numerous large deals did not close as expected, a direct signal that the shortfall was not just about timing but about revenue IBM expected to book and did not.
That matters for IBM because the company is trying to sell into a spending cycle that is changing fast. Customers prioritized AI infrastructure, including servers, storage and memory purchases, while budgets for traditional software were reduced. The result is a quarter where demand did not vanish, but moved to a different part of the technology stack.
AI infrastructure shifts budgets
$17.2 billion in expected revenue leaves IBM $660 million below the analyst consensus, a gap that points to deals not closing on the company’s timetable. The mismatch between revenue and adjusted earnings per share also shows the pressure is reaching both top-line sales and profit generation.
17% premarket losses put the market response in plain view before the open. For shareholders, the immediate issue is not just the revenue miss itself but whether IBM can convert AI demand into software and services revenue fast enough to offset the spending shift.
Ibm Stock was presented as potentially undervalued in a separate market view, but the July 14 update changed the near-term lens: investors now have to weigh AI-related customer demand against weaker quarterly execution. The unresolved question is how much revenue IBM lost from deals that did not close as expected, and whether that gap was concentrated in software or spread across more of the business.
