IBM stock price plummeted 25%, the largest single-day drop in history, and second-quarter financial warning
(International Business Machines Corporation) shares plunged 25% on Tuesday, recording their worst single-day performance ever. The technology company, which specializes in hardware, software and consulting services, announced preliminary second-quarter results that failed to meet market expectations. The decline exceeded the previous record of 23.7% on October 19, 1987. Retrospective statistics on stock price trading data begin in 1968, and IBM has been listed on the New York Stock Exchange since 1916. According to market data service provider FactSet: IBM's financial report showed that adjusted earnings per share were US$2.93 and revenue was US$17.2 billion; analysts had expected earnings per share of US$3.01 and revenue of US$17.86 billion. The overall performance was lower than expected. IBM CEO Arvind Krishna said that performance was lower than expected, mainly due to the weakening of software and infrastructure businesses, and customers shifting capital expenditures to hardware purchases such as memory chips. Krishna wrote in an open letter to investors: "In the last few weeks of June, customers shifted their quarterly capital expenditures to the purchase of servers, storage equipment and memory chips, rushing to lock in infrastructure hardware that was in tight supply before price increases. Although we had previously estimated some supply chain impacts, we did not expect the adjustment in the capital expenditure structure to be so large." Krishna added: "The current market environment requires the team to achieve extreme execution, and we made mistakes this quarter. The overall transformation and response speed were insufficient, and multiple large-scale contracts were not completed as scheduled. This was the main reason for the performance gap." Review IBM's last quarter results: Software revenue in the first quarter increased 11% year-on-year to US$7.05 billion; adjusted earnings per share were US$1.91, better than analysts' expectations of US$1.81; total revenue in the first quarter was US$15.92 billion, also exceeding market expectations of US$15.62 billion. This plunge coincides with continued concerns in the market: rapid iterations of AI technology may subvert the original business models of traditional large software manufacturers. Krishna mentions the AI safety model Mythos (developed by Anthropic): "AI models such as Mythos make customers hesitate: How much money do I still need to invest in traditional network security products? Many customers choose to postpone signing new contracts and wait and see. But we do not believe that IBM's software business will be disrupted by AI." As the demand for AI computing power explodes and the AI infrastructure construction boom continues, (Micron), SK Hynix (SKHynix) and other memory chip manufacturers have become the beneficiaries of this round of market conditions.