IBM posts worst day since 1968 as enterprise capex shift to AI hardware boosts Micron

Peace Longe Thu, July 16, 2026 at 11:18 AM PDT | 6 min read

• IBM: -2.91%
• MU: -0.50%

International Business Machines (IBM) has spent three years quietly convincing Wall Street it belonged in the artificial intelligence trade.

However, on July 14, the market decided otherwise in a single session. IBM shares closed at $217.07, falling 25.21% that day alone.

This came after the company pre-announced a second-quarter miss that nobody saw coming. That was its worst drop since 1968, even worse than Black Monday in October 1987.

Roughly $68 billion in market value vanished, and Big Blue is now worth about $204 billion.

Here's the part that should interest investors more: Micron Technology (MU) went up the same day, on the same news.

Why IBM's Earnings Warning Erased $68 Billion in One Session

IBM told investors its preliminary second-quarter revenue came in at $17.2 billion, against the $17.86 billion Wall Street expected.

The company also reported adjusted earnings of $2.93 a share versus the $3.01 consensus, according to Forbes.

The miss itself was small. But the reason behind it was not.

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CEO Arvind Krishna wrote to investors that clients redirected budgets toward servers, storage, and memory in the final weeks of June to lock down supply before prices climbed.

IBM misjudged how much money would move.

The CEO admitted the company "did not anticipate the magnitude of the capex reprioritization" and conceded that "this quarter we faltered," Axios reported.

Krishna also said numerous large deals failed to close on the timelines IBM expected. This failure drove most of the shortfall, International Business Times reported.

IBM shares closed down 25.21% on July 14, 2026, the company's steepest single-day fall since at least 1968. (Source: brunocoelhopt / Getty Images)

What "Capex Reprioritization" Means for Your Portfolio

A company has a fixed technology budget, and when one line item gets more expensive, another line item dies.

Chief information officers did not get bigger budgets in June. They got scarier hardware prices.

So CIOs bought the servers and the memory first, because you cannot run an AI workload on a purchase order.

Then, they pushed the software renewals and the consulting engagements into the next quarter or out of the plan entirely.

Even with this, IBM's software segment still grew 5%, with Red Hat up 11%. Although consulting was roughly flat, infrastructure fell 7%, The Motley Fool reported.

The damage was concentrated, not universal. That distinction matters because IBM did not lose to a competitor; it lost to a spreadsheet.

Why IBM's Fall Is the Validation Micron Has Been Waiting For

Micron makes high-bandwidth memory, or HBM.

HBM is a stacked version of DRAM that sits directly beside an AI processor and feeds it data fast enough to keep the chip busy. Every serious AI server needs it.

For most of its history, Micron was a stock that ate its own gains every few years. Prices boomed, capacity flooded in, margins collapsed, repeat.

Related: Veteran analyst drops massive Micron valuation prediction

IBM just handed the company evidence that this cycle is different.

When enterprises let software deals that are nearly closed die rather than risk missing a memory allocation, that is not elastic demand. That is a customer base with no substitute and no patience.

Micron shares reflected it immediately.