IBM forecasts preliminary Q2 revenue below estimates as spending shifts to AI

IBM's preliminary second-quarter revenue forecast came below Wall Street estimate on Tuesday, as customers prioritized spending on AI infrastructure, including servers, ‌storage ⁠and memory ⁠purchases, sending its shares slumping 17% in premarket trading.

The results reflect an industry-wide shift in technology spending toward AI infrastructure, reducing budgets for traditional ⁠software.

According to ‌the preliminary results, the company expects revenue ⁠of $17.2 billion during the quarter, compared with analysts' estimate of $17.86 billion, according to data compiled by LSEG.


Adjusted earnings per share is expected to be $2.93, compared with the ‌estimate of $3.02.

IBM CEO Arvind Krishna said in a letter to investors ⁠that in this quarter the company "faltered" in adapting quickly enough to the evolving market conditions, leading to "numerous large deals" not closing as expected.