IBM CEO Arvind Krishna is facing the toughest challenge of his leadership after the company’s shares plunged nearly 25% in a single trading session, wiping out around $70 billion in market value. The sharp decline followed weaker-than-expected preliminary second-quarter results, triggering concerns about IBM’s ability to keep pace with the rapidly evolving artificial intelligence (AI) market.
The company expects second-quarter revenue of $17.2 billion, missing analysts’ forecasts. Its earnings also fell short of market expectations, disappointing investors who had anticipated stronger growth.
Krishna admitted that IBM had a difficult quarter, saying several large customer deals were delayed and failed to close on schedule. He also acknowledged that many businesses are shifting their technology spending towards AI infrastructure, including servers and data centres, instead of software and IT services, where IBM earns a significant share of its revenue.
The disappointing update led to IBM’s worst-ever single-day stock decline, raising fresh questions about how traditional technology companies are adapting to the AI boom. While the stock recovered some losses later, investor confidence took a major hit.
The sell-off also affected several enterprise software companies, as markets worried that corporate technology budgets are increasingly moving away from software and towards AI hardware investments.
Krishna, who has led IBM since 2020 and helped reposition the company around hybrid cloud and AI, now faces mounting pressure to restore growth and reassure investors. IBM still has strong technological capabilities and a loyal enterprise customer base, but it must move faster to capitalise on the AI opportunity.