Infosys, Wipro ADRs crash up to 7% as IBM warning sends ripples across IT sector

Infosys and Wipro's US-listed shares fell in premarket trade after IBM warned that its second-quarter revenue would come in below Wall Street estimates, raising fresh concerns over enterprise technology spending.

Infosys ADRs dropped 7% while Wipro ADRs fell 3% after IBM said it expects second-quarter revenue of $17.2 billion. Analysts were expecting a revenue of $17.86 billion, according to LSEG data. IBM also expects adjusted earnings per share of $2.93, lower than the Street estimate of $3.02.

IBM shares fell sharply in premarket trading after the update, dragging other software and IT stocks lower. The company said customers shifted spending towards artificial intelligence infrastructure, including servers, storage and memory, in the final weeks of June. That left less room for traditional software and services spending.


IBM CEO Arvind Krishna said in a letter to investors that the company did not adapt quickly enough to changing market conditions, which led to several large deals not closing as expected. He said clients had moved quarterly capital spending towards data-centre infrastructure to secure supply-constrained equipment ahead of expected price increases.

Also Read: IBM stock tumbles 23% in premarket trading as preliminary quarterly results fall below expectations

The warning hit sentiment towards Indian IT ADRs because Infosys, Wipro and other large software services companies depend heavily on discretionary technology spending by global clients, especially in the US. Any sign that companies are delaying software deals or shifting budgets towards AI hardware can add pressure on revenue growth expectations for Indian IT exporters.

The fall also comes at a sensitive time for the sector. Indian IT stocks have already been under pressure this year because of weak discretionary demand, slower deal conversion and fears that AI-led automation could reduce billing opportunities in traditional services.

Earlier, brokerage estimates had pointed to a muted June quarter for large IT companies. Analysts expected revenue growth to remain soft, with clients continuing to scrutinise spending. Several brokerages had also flagged risks to FY27 growth guidance if demand did not improve in banking, retail, manufacturing and communication verticals.

The IBM update adds another layer of caution. The issue is not only weak software spending. The bigger concern is that AI budgets are being pulled towards chips, servers, storage and data-centre capacity first. That could delay spending on software and IT services projects, even as companies continue to talk about AI adoption.

For Infosys, investors will watch deal wins, large contract ramp-ups, margins and management commentary on discretionary spending. The company’s US exposure and consulting-led business make any shift in enterprise tech budgets important for sentiment.