This will be a giant black (or brown in his case. . .) mark on the AK regime. Thankfully, there's no way they can keep AK in-charge for much longer after this historical disaster.
https://www.wsj.com/finance/stocks/ibm-shares-sink-18-on-earnings-warning-d115d564
Weakness in infrastructure arm was worse than anticipated, as clients shifted spending to hardware and memory
By: Robbie Whelan and Robb M. Stewart |
Updated July 14, 2026 10:52 am ET
International Business Machines shares sank as much as 25% in morning trading after the company issued a profit warning citing a shift in customer spending from software to AI hardware and memory chips.
IBM said the performance of its software and infrastructure business fell short of expectations in the second quarter, and the company didn’t react quickly enough to changing market conditions. Tuesday’s share decline was the largest intraday percentage decrease for the company on record.
Chief Executive Arvind Krishna said in a letter to investors that the weakness in IBM’s infrastructure arm was worse than anticipated, driven by a shortfall in demand for the z17, the company’s flagship enterprise mainframe designed for the artificial intelligence age. The company expects infrastructure revenue to fall 7%, after previously anticipating a low-single-digit decline.
The rapid rise of AI caught makers of memory chips, especially the building blocks of high-bandwidth memory known as DRAM and the short-term flash memory known as NAND, off guard. That led to a capacity crunch that has pushed up prices on a wide variety of products—from laptops and gaming consoles to AI data-center servers—as much as 20% to 40% over a short period of time.
Big enterprise customers like banks—a core customer base for IBM—are particularly susceptible to fluctuations in chip prices because they buy an enormous amount of computing power from cloud companies to run in-house tools.
Consumer-facing companies are also feeling the crunch. Apple CEO Tim Cook recently said price increases for its devices, including the iPhone, were unavoidable. “There’s less supply at a time when consumers want devices and the memory guys are passing along huge price increases,” Cook told The Wall Street Journal in an exclusive interview.
IBM said it plans to report revenue of $17.2 billion and adjusted earnings of $2.93 a share for the June quarter. Both figures are short of analysts’ expectations of $17.9 billion and $3.01 a share.
Its pretax income margin is expected to have contracted 90 basis points, to 14.4%.
IBM is scheduled to release its official second-quarter figures next week.
Krishna said that in the past few weeks of June, clients shifted their quarterly capital expenditures toward servers, storage and memory to secure supply-constrained infrastructure ahead of anticipated price increases.
“While we anticipated some supply chain-related impact in our expectations, we did not anticipate the magnitude of the capex reprioritization,” Krishna said.
“These conditions require our teams to execute perfectly, and this quarter we faltered,” Krishna said. He explained that IBM didn’t adapt and move quickly enough, and a number of large deals failed to close on the timelines expected.
“IBM got hit with a triple whammy,” Emarketer analyst Jacob Bourne said in a note to clients Tuesday. “The AI buildout is concentrating capex in hardware like memory chips and diverting spend from software and services. Markets are going to punish legacy players showing signs of losing ground in the AI race.”
Bourne predicted that as more customers shift away from software as a service to more enterprise AI, investors could see more quarters like this one: “But I think it’s a disruption story, not necessarily an extinction one for legacy software companies. Spending patterns will shift from the present focus, and the vendors that adapt their products to the changing market will stay competitive.”