International Business Machines (IBM) just had its worst trading day in more than a century as a public company. Shares plunged 25% on 14 July 2026, closing at USD 217.07, after IBM warned that its second-quarter results would fall well short of what investors were expecting.
The drop outpaced even the company’s previous worst day, a 23.7% fall on 19 October 1987, and wiped out roughly USD 68.8 billion in market value in a single session.
IBM’s trading records only go back to 1968, but the company has actually been listed on the New York Stock Exchange (NYSE) since 1916, meaning this is the worst single day in more than a hundred years of trading history for the stock.
Just eight days earlier, on 6 July, Bank of America had raised its price target on IBM to USD 330, and the stock had closed the prior session at USD 290.23, not far off a recent high of USD 332.46. That optimism made the reversal all the more jarring for investors who had been betting on continued strength.
IBM issued its warning ahead of its scheduled earnings date, a move known on Wall Street as a preannouncement. The company said second-quarter revenue would come in at USD 17.2 billion, missing analyst forecasts of USD 17.86 billion, while adjusted earnings per share of USD 2.93 fell short of the expected USD 3.01. GAAP earnings per share came in around USD 2.27, a 2% decline from a year earlier, and pretax income margin slipped to roughly 14.4%, down 90 basis points.
Software revenue still grew 5% and consulting held roughly steady, but the infrastructure business, which includes IBM’s mainframe hardware, slid 7%. The swing looks especially sharp against the first quarter of 2026, when software revenue had actually grown 11% to USD 7.05 billion.
In a letter to investors, chief executive Arvind Krishna explained that clients had suddenly redirected spending away from software and consulting in the final weeks of June, choosing instead to buy servers, storage and memory chips before an expected wave of price increases.
Krishna said the company had not adapted quickly enough and that a number of large deals failed to close on schedule as a result. He had flagged as far back as April that the second quarter would involve completing the rollout of IBM’s new z17 mainframe, an AI-capable system, though he acknowledged the company had not anticipated the scale of the spending shift this triggered.
Behind that shift sits a broader problem gripping the tech industry, a severe global shortage of memory chips. Major chipmakers such as Samsung, SK Hynix and Micron have redirected production toward the specialised chips used in AI data centres, leaving less capacity for the everyday memory used in ordinary servers, PCs and phones. That squeeze has pushed prices up and prompted many companies to buy hardware early.
IBM’s fall rattled the wider software sector too. Salesforce dropped 4% and Microsoft fell almost 3% the same day, while the IGV software ETF, which tracks a broad basket of software companies, slipped 2%.
Analysts noted that IBM’s revenue miss, at under 4%, was fairly modest, but the size of the share price reaction reflects how highly valued the stock had become beforehand, trading at roughly 23 times forward earnings just before the warning.
In the aftermath, the stock traded around USD 219.50, with a relative strength index of just 19, a level technically considered very oversold, and analysts pegged near-term support at USD 213.28.
The episode has split opinions. Some analysts see it as a company-specific execution stumble tied to a temporary memory chip shortage. Others read it as an early sign that spending on AI infrastructure is starting to eat into traditional enterprise software and consulting budgets more broadly, not just at IBM.
IBM is due to report its full second-quarter results on 22 July 2026, which should clarify whether the lost revenue was simply delayed into the next quarter or reflects a genuine slowdown in demand.
In the meantime, HSBC has already cut its rating on the stock to “Reduce,” with a lowered price target of USD 191, suggesting some analysts expect the pressure on IBM’s traditional software and consulting business to continue s rating on the stock to “Reduce,” with a lowered price target of USD 191, suggesting some analysts expect the pressure on IBM’s traditional software and consulting business to continue.