IBM shares plunge on weak Q2 results

IBM released disappointing preliminary second-quarter results on July 14, 2026, with revenue of $17.2 billion (up just 1%) and a 24-25% plunge in share price. The company attributed the miss to a shift in customer spending toward AI-related hardware (servers, memory chips) due to expected price increases, which pulled spending away from IBM's higher-margin mainframe computers and related software. Cybersecurity concerns, sparked by Anthropic's release of the Mythos AI model, also distracted clients and delayed deals. IBM's infrastructure revenue fell 7%, while software revenue grew 5% but below expectations. On the positive side, OpenShift revenue grew 11%, and server/storage revenue surged 37%. IBM announced the Lightwell initiative, a $5 billion effort to fix open-source software vulnerabilities, backed by Bank of America, JPMorgan Chase, and Goldman Sachs. The results heightened fears of an 'AI-Loser' effect on traditional SaaS companies, dragging down shares of Salesforce, Adobe, and Intuit. Cybersecurity firms CrowdStrike, Okta, and Netskope saw share price increases. Analysts from Evercore, Citigroup, and Susquehanna commented that the miss was largely specific to IBM's mainframe business rather than a broader software sector weakness.