IBM shares suffered their worst trading day since 1968 on Tuesday after the company admitted it had “stalled” in adapting to the technology industry’s shift in spending toward the race for artificial intelligence.
Shares of the technology company, which sells software and powerful mainframe computers, fell as much as 27% in intraday trading, the biggest one-day decline since at least Jan. 3, 1968, according to Bloomberg. IBM said sales slumped as customers shifted more spending to computer chips and data centers that power the AI sector.
Arvind Krishna, IBM’s CEO, said the company “did not anticipate the extent of the reprioritization of capital spending across the technology industry.”
Anthropic’s advanced Mythos model has shaken up businesses this year with its ability to uncover vulnerabilities in existing software and encryption systems, pushing companies to increase cybersecurity. Erik Pendzich/Shutterstock
“These conditions require perfect performance from our teams, and this quarter we faltered,” Krishna said in a letter to investors.
“We did not adapt and act quickly enough, and numerous large deals failed to close in the expected timeframes, which accounted for the majority of our deficit,” he added.
IBM’s warning fueled more concern on Wall Street, where investors are already concerned that powerful AI models will make traditional software offerings obsolete. Business software companies like ServiceNow and Workday each saw their share prices plunge after the letter was published.
Krishna added that IBM’s customers were “distracted by rapidly evolving, industry-wide cybersecurity concerns during the quarter” – an apparent reference to the release of new AI models such as Anthropic’s Claude Mythos, which demonstrated unprecedented capabilities to identify and exploit software flaws.
CEO Arvind Krishna said “numerous large deals” had not closed as expected. AFP via Getty Images
“These are not excuses but realities,” Krishna added. “Our mission is to help our customers navigate uncertainty and find ways to grow their businesses, regardless of what is happening in the external environment.”
IBM expects second-quarter revenue to rise just 1% to $17.2 billion, well below analyst estimates and the slowest growth rate in more than a year, according to LSEG data.
The company forecast quarterly adjusted earnings per share of $2.93 for the current period, below the market estimate of $3.02.
Anthropic’s advanced Mythos model has shaken up businesses this year with its ability to uncover vulnerabilities in existing software and encryption systems, pushing companies to increase cybersecurity. ZUMAPRESS.com
The performance marks “an ugly moment for IBM and software stocks,” IG Group chief market analyst Chris Beauchamp told Reuters.
“The big question will be how long the transition to infrastructure and cybersecurity lasts,” Beauchamp added. “A few more months may be bearable, but beyond that, serious questions will once again be asked about software stocks.”
Krishna tried to reassure investors by pointing to IBM’s own investments in new technologies, including AI-powered cybersecurity and quantum computing.
With post wires
https://nypost.com/2026/07/14/business/ibm-shares-plunge-25-as-ai-spending-boom-hammers-business/
