IBM shares suffered one of the steepest one-day declines in the company’s modern history after the technology giant released preliminary second-quarter results below expectations, wiping about $65 billion from its market value and prompting veteran investor Michael Burry to argue the company has repeatedly recovered from crises that once appeared existential.
- IBM shares plummet twenty-six percent, erasing sixty-five billion dollars in market value following preliminary second-quarter revenue of seventeen billion dollars.
- CEO Arvind Krishna reports an abrupt "capex reprioritisation," with enterprise clients delaying software contracts to secure supply-constrained servers and memory.
- Michael Burry identifies the crash as one of the largest in IBM's century-long history, comparing current volatility to the firm's major recoveries in 1968, 1973, and 1987.
The century-old technology company said revenue would reach about $17.2 billion for the quarter ended June, below analysts’ expectations of $17.86 billion. Investors responded by sending the stock down as much as 26% during Tuesday’s trading, making it one of IBM’s worst single-day declines on record.
The sell-off came after IBM said customers unexpectedly delayed software purchases and redirected spending toward servers, storage, and memory during the final weeks of the quarter. Full second-quarter results are scheduled for July 22.
IBM Says Customers Redirected Spending as Quarter Ended
IBM’s preliminary results pointed to an abrupt shift in enterprise technology spending rather than broad weakness across every part of its business.
Chief Executive Arvind Krishna, who has led IBM since 2020, said many customers accelerated purchases of servers, storage, and memory to secure supply-constrained infrastructure before expected price increases, delaying other technology investments.
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→ Submit a Press Release“In the last few weeks of June, we saw clients shift their quarterly capex spend toward servers, storage, and memory purchases to secure supply-constrained infrastructure ahead of expected price increases,” Krishna said.
Krishna added that rapidly evolving cybersecurity concerns across the technology sector also distracted customers from completing large software transactions before the quarter ended.
“We did not anticipate the magnitude of the capex reprioritization,” he said.
Software revenue still rose about 5%, consulting revenue was broadly unchanged, and infrastructure revenue declined 7%. IBM expects to report adjusted earnings per share of $2.93 when it publishes full quarterly results next week.
Burry Says IBM Has Survived Worse Before
While markets focused on the size of the sell-off, Burry argued the decline should be viewed through the company’s long history rather than as an isolated event.
Writing to subscribers, the investor best known for predicting the U.S. housing market collapse said IBM’s fall ranked among the largest one-day declines in the company’s history, noting the stock had fallen about 26% at its intraday low.
Burry traced similar moments across decades of IBM’s history.
He pointed to 1968, when IBM traded as one of Wall Street’s celebrated “Go-Go” growth stocks before later becoming part of the so-called Nifty Fifty, a group of companies widely regarded as investments that could be bought at almost any price.
During the 1973-74 bear market, IBM eventually lost about 58% of its value as the company battled slowing growth and a lengthy antitrust lawsuit brought by the U.S. Department of Justice.
Burry also noted IBM’s second-largest one-day decline came during Black Monday in October 1987, while another sharp fall earlier this year followed concerns about artificial intelligence disrupting legacy software businesses.
“Still, investors in IBM had every right to expect not to be down 26% in a single day,” Burry wrote.
A Century of Reinvention Faces Another Test
Burry argued IBM’s history has been defined by repeated reinvention rather than uninterrupted growth.
The company transformed itself from a dominant hardware manufacturer into an enterprise software and consulting business after demand for its traditional mainframe systems weakened during the 1990s. That transition compressed profit margins before IBM rebuilt its business around software, services, and enterprise technology.
More recently, IBM has focused on hybrid cloud computing and artificial intelligence following its $34 billion acquisition of Red Hat in 2019. Krishna has expanded that strategy through enterprise AI products aimed at business customers rather than consumer chatbots.
Burry described IBM’s ability to navigate successive technology shifts as one of the most remarkable corporate transformations in American industry, arguing the company’s latest setback should be viewed within that broader context.
Investors Await Full Earnings Report
IBM is scheduled to release its full second-quarter results on July 22, when investors are expected to receive updated guidance on enterprise spending, software demand, and the company’s outlook for the remainder of the year.
The report will provide further detail on the delayed customer contracts, infrastructure spending trends, and whether management expects the disruption seen late in the quarter to continue into the second half of 2026.
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