On May 14, 2026, IBM (International Business Machines) shares plummeted 25% on Tuesday after the hardware, software and consulting provider released preliminary second-quarter results that fell short of expectations.
Subjective Q: are you buying IBM's dip?
CEO Arvind Krishna blamed the shortfall on weakness in the software and infrastructure business, as clients shifted spending toward hardware purchases such as memory chips:
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.
IBM's industry observation could open up some interesting discussions:
*Is Ai chips & services squeezing out subscription-based products? Before Ai boom, upgrading softwares or maintaining the existing infrastructure seemed to be the only option to spend for budget. Now, amid Ai boom, investing into the theme sounds way more "sexy-ier".
*Is Ai capex build-up over yet? Capital continues to flow into servers, storage, and memory chips – against recent stock price drops in that sector. The shift in business model requires heavier hardware investments. Supply-demand dynamics remains tight amid constrained manufacturing capacity.
Will you buy the dip?
Source:
- IBM press room; July 14, 2026; https://newsroom.ibm.com/2026-07-14-Arvind-Krishnas-Letter-to-IBM-Investors
