IBM crashes 25% after unscheduled earnings warning, erasing $68B in market cap

Published Jul 19, 01:10 PM UTC

IBM's stock suffered a historic 25% crash on July 14, 2026, erasing $68 billion in market value, despite a booming AI investment cycle. The company issued an unscheduled preliminary earnings warning, revealing Q2 revenue of $17.2 billion (up only 1%, missing estimates by $660 million) and adjusted EPS of $2.93 (below $3.02 consensus). CEO Arvind Krishna admitted the company 'faltered' as AI spending shifted toward hardware, benefiting IBM's distributed infrastructure (up 37%) but hurting its mainframe (IBM Z) and software businesses. Software growth slowed to 5% from 11% in Q1, breaking the narrative that supported IBM's premium valuation. Several large deals slipped, and cybersecurity concerns diverted budgets. Hedge fund positioning was mixed, with short interest rising. The article concludes IBM is a 'hold' until software growth recovers and slipped deals close.