IBM shares plunge 25% as customers shift spending to AI

{"text":[[{"start":9.5,"text":"IBM issued a profit warning that sent its shares plunging more than 20 per cent, as customers raced to redirect spending to servers and storage ahead of price increases driven by the AI boom."}],[{"start":22.65,"text":"The tech company had expected strong sales in mainframes and related software but instead corporate clients shifted to buying computing infrastructure from elsewhere."}],[{"start":32.65,"text":"“These conditions require our teams to execute perfectly, and this quarter we faltered,” said chief executive Arvind Krishna. “We did not adapt and move quickly enough, and numerous large deals failed to close on the timelines we expected, driving the majority of our shortfall.”"}],[{"start":50,"text":"Shares closed 25 per cent lower, in the biggest drop since at least 1972 and exceeding the fall it recorded during the 1987 Black Monday crash. "}],[{"start":60.2,"text":"Infrastructure revenue fell 7 per cent in the second quarter, IBM said, compared with an expectation for a “low single-digit” decline. Software revenue rose 5 per cent. Overall revenues were $17.2bn, up 1 per cent on the same period a year ago but below analyst estimates of $17.8bn. Earnings per share fell 2 per cent to $2.27 and were also below forecasts."}],[{"start":87.95,"text":"The warning exposes the challenge facing IBM as it seeks to recast itself from a company associated with mainframes and hardware into a faster-growing software group. "}],[{"start":98.3,"text":"After spending tens of billions of dollars on acquisitions including Red Hat, HashiCorp and Confluent, IBM is now contending with an AI investment cycle that is funnelling corporate budgets towards computing infrastructure while raising new questions over the durability of established software businesses."}],[{"start":119.15,"text":"IBM has sought to capitalise on the AI boom, with Krishna describing its acquisition of data streaming platform Confluent in December as an opportunity to “deploy generative and agentic AI better and faster”."}],[{"start":131.9,"text":"But Krishna admitted that IBM had failed to anticipate the “magnitude” of the shift in spending as clients raced “to secure supply-constrained infrastructure ahead of expected price increases”."}],[{"start":143.5,"text":"He added that customers had also been “distracted” by “rapidly evolving, industry-wide cyber security concerns”."}],[{"start":null,"text":"

"}],[{"start":151.05,"text":"The US group has also struggled to shake off investor concerns about the outlook for established software companies. In February, the company’s shares tumbled after Anthropic said its Claude Code AI tool could help modernise a programming language used on IBM’s mainframes."}],[{"start":168.20000000000002,"text":"Additional reporting by Emily Herbert in London"}],[{"start":178.55,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1784079349_1496.mp3"}