IBM reports preliminary Q2 revenue up 1% YoY to $17.2B, below $17.9B est., as CEO Arvind Krishna says customers are shifting spending to chips; IBM falls 25%

International Business Machines Corp. shares slid after the company reported preliminary second-quarter sales that fell short of expectations …

Bloomberg 2026-07-14 Amy Thomson

Context & Ripple Effects

IBM's latest shortfall follows a markedly stronger first quarter, when software revenue grew and the company maintained its full-year outlook. The reversal puts renewed attention on the durability of that improvement.

Earlier related coverage records a long period of IBM revenue declines and repeated revenue misses. The current result matters because management attributes the pressure to a change in customers' technology-budget priorities rather than simply an execution issue in one quarter.

First-order effects

IBM's preliminary second-quarter revenue came in below expectations, prompting a sharp share-price decline and increasing near-term scrutiny of its full-year outlook.
Customers shifting spending toward chips directly constrains the budget available for IBM's software, services, and other offerings.

Second-order effects

Enterprise-technology vendors competing for the same customer budgets may face longer sales cycles or greater pressure to show a direct return on AI-related spending.
IBM will have added incentive to tie its software and services more clearly to customers' infrastructure and chip investments, rather than rely on broad IT-budget growth.

Third-order effects

If customer spending continues to favor compute infrastructure, the AI investment cycle could initially concentrate more value with chip and infrastructure suppliers than with incumbent enterprise-software vendors.
The pattern would make growth in enterprise IT increasingly dependent on vendors' ability to monetize workloads built around new compute capacity, not merely on general digital-transformation budgets.

The trend: This is one data point in an AI-era capital-allocation shift in which customers prioritize compute capacity before expanding spending on the software and services layered on top of it.

Discussion

@negligible_cap @negligible_cap on x
$IBM CEO's letter along with the pre-announcement might be the most bearish news for SAAAS yet. Companies are pulling back on software spending to prioritize AI capex and cybersecurity. [image]
@kakashiii111 @kakashiii111 on x
“...we did not anticipate the magnitude of the capex reprioritization.” Remember this sentence. It's going to be used by some company CEOs in the near future.
@thetranscript_ @thetranscript_ on x
IBM's preliminary Q2 26 results fall short of its expectations CEO: “...we did not anticipate the magnitude of the capex reprioritization. In addition, clients were distracted with rapidly-evolving, industry-wide cybersecurity concerns in the quarter” $IBM: -17% Pre-Market [image…
@wallstengine @wallstengine on x
$IBM released preliminary Q2 results BELOW internal expectations as mainframe and software sales disappointed, with large deals failing to close on expected timelines. CEO: “This quarter we faltered.” Revenue: $17.2B vs $17.86B est. 🔴, up 1% YoY Software: +5% Consulting: flat, [i…
@zerohedge @zerohedge on x
May as well get the bad news out asap *IBM PRELIM 2Q REV. $17.2B, EST. $17.86B Stock plunging
@petertl Peter Thal Larsen on bluesky
IBM got clobbered by AI chipflation. — newsroom.ibm.com/2026-07-14- A... [image]
r/StockMarket r on reddit
IBM stock craters 23% after issuing second-quarter earnings warning
r/ValueInvesting r on reddit
Mr President, we have the second SaaSpocalypse.
@benbajarin Ben Bajarin on x
MS note, per IBM. Generally I am highly uninterested in $IBM, however, this time, there is very interesting signals for infra-compute trends. [image]
@stephanie_link Stephanie Link on x
$IBM: Bad day after 2Q citing client capex shift to memory/hardware given supply constraints & price hikes. But mgmt poor execution on closing deals 2. Rare miss for Arvind Krishna whose stock +105% since he's been CEO. Debate: AI taking over software or just a timing issue.
@sonalibasak Sonali Basak on x
Brutal showing by IBM. The direct acknowledgment that clients have shifted AI capex spend toward core infrastructure — the question is how long the “reprioritization” lasts. [image]
@dee_bosa Deirdre Bosa on x
IBM risks getting squeezed from both sides by AI. 1) IT budgets moving to AI infrastructure 2) AI could now cut software & consulting spend Anthropic research showed where this was headed over a year ago. 37% of Claude use was computer/math work (coding, debugging and [image]
@saraeisen Sara Eisen on x
I spoke to IBM CEO Arvind Krishna about the warning today and here's what he told me: “A few large capex deals paused near the end of the quarter. It's not widespread. It's mainframe and the software associated with it....Mythos is making people pause to say, wait how much do I
@danielnewmanuv Daniel Newman on x
$IBM miss was mainframe not software. The drag on all enterprise software is the better headline but isn't accurate. 👀
r/business r on reddit
IBM stock craters 23% after issuing second-quarter earnings warning

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