IBM: What Its Earnings Misses Say About the State of AI Right Now

IBM reported preliminary Q2 revenue of $17.2 billion, up 1% year-over-year, and adjusted earnings per share of $2.93—both missing analyst expectations. The stock collapsed 25% in a single session, marking the worst single-day decline in the company's history.

The miss reveals a concrete shift in AI infrastructure spending. IBM disclosed that customers are redirecting budgets away from software toward servers, storage, and memory hardware. Supply constraints and rising prices for data center components are driving the reallocation, hitting IBM's traditional software business while benefiting hardware-focused competitors.

The divergence is already visible in the market. Memory and storage providers SK Hynix, Micron, and SanDisk are capturing surging demand as enterprises prioritize physical infrastructure to support AI workloads. IBM's guidance suggests this trend is structural, not transient, as capacity bottlenecks persist across the semiconductor supply chain.