IBM stock lost around 25% of its value on Wall Street overnight after the company issued an unexpected warning on preliminary second-quarter 2026 figures that missed analyst forecasts. CEO Arvind Krishna: "The teams failed"

IBM shares posted their steepest one-day fall in more than half a century last night (Tuesday), plunging 25.2% to close at 217.07 dollars and wiping roughly 55 to 67 billion dollars from the company's market capitalization.

The steep slide, which surpassed even the company's worst session during the 1987 Black Monday crash, followed an unforeseen warning on preliminary second-quarter 2026 results that fell short of Wall Street projections and raised concerns over whether large enterprise clients are postponing or trimming software and services outlays.

Having peaked at 332.46 dollars in June, the shares retreated to levels last seen in mid-May and now sit more than 27% lower year to date. Early trading saw a drop exceeding 23% at the lows, prompting HSBC to downgrade the stock to "Reduce" and slash its price target to 191 dollars.

Preliminary figures showed second-quarter revenue of 17.2 billion dollars, a 1% increase from a year earlier yet below analyst estimates of 17.86 to 17.9 billion dollars. Adjusted earnings per share came in at 2.93 dollars, missing forecasts of 3.01 to 3.02 dollars, while GAAP diluted earnings per share stood at 2.27 dollars, down 2% year over year. Full results are due on July 22.

CEO Arvind Krishna attributed the shortfall to a late-June pivot by customers who rushed to buy servers, storage and memory ahead of anticipated price hikes, thereby deferring major software and consulting contracts. He acknowledged internal execution shortfalls, noting that teams "failed" to adapt swiftly enough and that the shift proved more severe than anticipated, with IBM not foreseeing the full scale of the change in capital-spending priorities.

The warning rippled across the broader software and IT-services sector, with Microsoft and ServiceNow shares easing and the iShares Expanded Tech-Software Sector ETF falling nearly 4%. Market observers described the move as a "SaaS reckoning," reflecting a re-pricing of enterprise software rather than outright deal cancellations.

IBM stressed that its long-term investment narrative remains intact and outlined plans for the Lightwell initiative, a 5-billion-dollar project with Red Hat involving more than 20,000 engineers. The company also announced plans to invest over 10 billion dollars in quantum computing during the next five years and a partnership with the US Department of Commerce to build what it calls the world's first dedicated quantum-wafer fabrication facility.