Why Salesforce Stock Slumped on Tuesday

Salesforce shares dropped more than 2% Tuesday after IBM issued weak earnings guidance that rattled the software sector. IBM CEO Arvind Krishna blamed the shortfall on customers redirecting technology budgets from software to hardware—specifically servers and storage—to build out AI infrastructure and prepare for anticipated price increases.

The spending shift signals potential headwinds for enterprise software providers. While Salesforce has maintained strong market positioning in CRM and cloud applications, the IBM warning raises questions about near-term software demand if the hardware-over-software trend accelerates across corporate IT budgets. The selloff reflected broader concern that AI infrastructure buildout could pressure software revenue growth in the coming quarters.