IBM stock dropped 23% in pre-market trading after reporting second-quarter revenue of $17.2 billion, missing analyst expectations of $17.86 billion. The decline highlights a slowdown in software and infrastructure divisions as customers shift spending toward artificial intelligence. The news impacted major US tech stocks and led to a fall in ADRs of Indian IT firms like Infosys and Wipro.
International Business Machines Corp. (IBM) shares saw a sharp decline of 23% in pre-market trading on July 14, 2026. This sudden move followed the company's release of its second-quarter financial results, where it reported preliminary revenue of $17.2 billion. This figure failed to meet the consensus analyst estimate of $17.86 billion, signaling a difficult period for the legacy tech giant.
Impact of Changing Technology Spending
The revenue miss was largely driven by a slowdown in IBM’s software and infrastructure segments. In its update, the company noted that clients are currently reallocating their budgets toward artificial intelligence infrastructure. This shift away from traditional software services hurt the infrastructure division, which recorded a 7% drop in sales. Chief Executive Officer Arvind Krishna indicated that the company did not adapt fast enough to these changing market conditions, which also led to the loss of several large pending deals during the quarter.
Sector-Wide Sell-Off and Indian ADR Impact
Investors reacted to the results by selling off stocks across the global software sector. The negative sentiment spread quickly, causing shares of other major technology companies to slide. ServiceNow dropped 6.8%, Accenture fell 8.5%, Adobe declined 4.8%, and Oracle fell 2.3%. This downward pressure reached Indian technology stocks listed in the US as well. American Depository Receipts (ADRs) of Infosys fell nearly 9%, while Wipro’s ADRs traded 3% lower on the New York Stock Exchange.
Strategic Challenges and Investor Monitorables
The performance of the company has raised questions regarding its strategic shift toward becoming a high-growth software firm, a transition it has been pursuing through acquisitions like Red Hat. While management remains focused on leveraging AI to drive future demand for its infrastructure software, the latest numbers indicate that this transition is proving more difficult than initially planned. Investors will now closely watch the company’s upcoming management commentary for updates on how it plans to accelerate deal closures and stabilize revenue growth in the face of shifting customer priorities. The primary monitorable for shareholders will be whether the company can successfully align its infrastructure offerings with the current surge in AI-related spending to recover lost momentum.