US equity indices opeend higher on Tuesday following softer US CPI data. The S&P 500 rose modestly, the Nasdaq 100 saw a 0.7% gain, and the Dow recovered from a significant drop, remaining just below flatline.
Chip manufacturers saw a resurgence, with Micron and Sandisk both up by 5%, alongside a 1% increase for Nvidia. In contrast, major banks experienced declines; JPMorgan fell 2.5% despite record profits, while Bank of America dropped 1% despite exceeding earnings expectations.
SpaceX shares were higher by 1%, while recently listed SK Hynix ADR trades 12% higher on Tuesday.
The biggest drop is seen in IBM shares. International Business Machines (IBM) shares fell significantly on Tuesday following the release of selected preliminary second-quarter 2026 financial results. The IBM share price fell over 24% in the initial few minutes of trading after market open.
IBM listed on NYSE has fallen over 20% in the last 12 months and trades around $225. IBM’s 2Q 2026 earnings announcement is on July 22, 2026.
Why has the price crashed
In a Form 8-K filing with the US SEC, IBM’s Chairman and CEO, Arvind Krishna, addressed investors regarding the company’s quarterly performance and the reasons behind the shortfall in Software and Infrastructure revenue.
For the second quarter, the release highlights:
Gross Profit Margin: GAAP: 57.7 percent, down 100 basis points; Operating (Non-GAAP): 59.4 percent, down 70 basis points
Pre-Tax Income Margin: GAAP: 14.4 percent, down 90 basis points; Operating (Non-GAAP): 19.2 percent, up 30 basis points
Revenue of $17.2 billion, up 1 percent
Software revenue up 5 percent
Consulting revenue flat, up 1 percent at constant currency
Infrastructure revenue down 7 percent
Year to date, net cash from operating activities of $7.8 billion; free cash flow of $4.8 billion
EPS:
Diluted Earnings Per Share: GAAP: $2.27, down 2 percent; Operating (Non-GAAP): $2.93, up 5 percent
Here’s what Krishna wrote to investors:
“When we discussed our expectations with you in April, we noted that we would be wrapping on the launch of z17 in the second quarter. Given this was the strongest start to a mainframe program in our history, we expected Infrastructure revenue to decline low-single digits for the year, beginning this quarter.
What played out was worse than our expectations, driven by a shortfall in our Z performance and the associated software stack, primarily in Transaction Processing.
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. This dynamic impacted client buying patterns.
While we anticipated some supply chain related impact in our expectations, we did not anticipate the magnitude of the capex reprioritization. In addition, clients were distracted with rapidly-evolving, industry-wide cybersecurity concerns in the quarter.
These conditions require our teams to execute perfectly, and this quarter we faltered. We did not adapt and move quickly enough, and numerous large deals failed to close on the timelines we expected, driving the majority of our shortfall.”
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