IBM Stock Drops 26%: Big Blue Struggles with AI and Memory Crisis

IBM shares tumbled more than 26% on Tuesday after preannounced earnings fell short of expectations. The company, which has seen its worst single-day drop since at least 1968, attributed the results to shifting customer spending from traditional mainframe and software products to AI servers and memory. CEO Arvind Krishna acknowledged that the 'capex reprioritization' was far worse than anticipated, with the z17 mainframe business declining by more than expected. The global memory shortage, coupled with AI adoption acceleration, has forced IBM to reallocate enterprise budgets. Analyst Ashish Nadkarni from IDC noted that while the reaction was stronger than justified, IBM is not isolated in this strategic shift. Competitors like Oracle (down 33%), Microsoft (down 20%), and Accenture (down 50%) are also facing challenges. IBM's quarterly earnings call is scheduled for July 22.