IBM Stock Collapses After a Grave Warning About AI
2 45IBM shares plunged after the company warned that Q2 revenue and earnings would miss expectations, blaming customers' sudden shift in spending toward AI hardware instead of software services. However, CEO Arvind Krishna did not place all the blame on IBM's customers. The CEO also said it "faltered" by failing to "anticipate the magnitude of the capex reprioritization."
"These conditions require our teams to execute perfectly, and this quarter we faltered. We did not adapt and move quickly enough, and numerous large deals failed to close on the timelines we expected, driving the majority of our shortfall." Fast Company reports: In the preliminary report, IBM said that for its second quarter of fiscal 2026, it expects revenue of $17.2 billion, which is up 1%. It also said it expects a Non-GAAP Diluted Earnings Per Share (EPS) of $2.93, up 5%. However, as noted by CNBC, these preliminary results are below what analysts were expecting, which was $17.86 billion in revenue, and an EPS of $3.01, according to FactSet data.
2 comments
Re:good self awareness (Score: 5, Interesting)
by Gramie2 ( 411713 ) on Tuesday July 14, 2026 @01:33PM (#66238312)
I don't know the details, but IBM has been switching its emphasis from hardware to services for quite a while. They sold off their Lenovo brand in 2014.
Lots more profit in services, as any customer who has had the misfortune to hire them has (to their sorrow) found. Like the Quebec Ministry of Transport, whose project to digitize car and driver licensing is years late and has topped $1.1 billion. Yes, billion. Thanks IBM (and SAP)!
Re:good self awareness (Score: 5, Interesting)
by jd ( 1658 ) on <imipak @ y a h o o . com> on Tuesday July 14, 2026 @01:52PM (#66238352)
Good question. Their POWER series of CPUs were not insignificant in capability, their chip designers were clearly technically sophisticated, and GPUs are just specialised vector processors with a few extra bells and whistles - stuff IBM is extremely familiar with.
It would not have been difficult to release a GPU or other LLM-specific processor to go along with the POWER11. They'd been working on the POWER11 for 4 years, they knew in 2020 that LLMs had a strong potential to be significant for Big Data processing - an area you use big iron for, they're not rank amateurs, they have plenty of reserve, they could have assembled an emergency team to build a vector processor that was custom-designed for just LLM work, and released an LLM processor card that could run circles around nVidia.
They didn't. Because, as has happened before, their management is simply too stupid and too slow.