How much did IBM's stock fall after the warning?

IBM's stock fell 25% in a single day, its steepest one-day decline in over a century.

What did IBM's CEO say about the company's performance?

CEO Arvind Krishna said IBM had 'faltered' in adapting and that 'numerous large deals' had slipped.

Does IBM expect customers to return to mainframes?

Yes, executives believe customers are not looking to move away from mainframes in the longer term.

IBM Cuts Annual Revenue Growth Forecast as AI Spending Shifts

IBM cut its annual revenue growth forecast after warning that corporate spending is shifting to AI data-center gear at the expense of software and mainframes. Shares fell 25%.

July 22, 2026

2 min read

Source: Reuters

Key Numbers

stock decline

25%

IBM (IBM) cut its annual revenue growth forecast on Wednesday, days after shocking Wall Street with a warning that corporate spending was shifting toward AI-focused data-center gear at the expense of its software and mainframe computers.

Details

Executives sought to reassure shareholders that customers prioritized spending on AI in the quarter but were not looking to move away from mainframes in the longer term. CEO Arvind Krishna said last week IBM had "faltered" in adapting and "numerous large deals" had slipped, sending the company's shares down 25%, its steepest one-day fall in more than a century.

Context

The forecast cut comes amid a major shift in the technology industry toward AI, as companies upgrade infrastructure to meet AI application demands. IBM faces intense competition from Microsoft and Amazon in the cloud services market, as well as the challenge of transforming its legacy business.

What This Means for Investors

This downgrade is a short-term negative signal for IBM, reflecting weak demand for its traditional products. However, the company's focus on AI could pay off in the long run if it successfully executes its strategy. Investors should monitor corporate capital spending trends and IBM's ability to regain growth momentum.

Frequently Asked Questions

IBM cut its forecast due to a shift in corporate spending toward AI-focused data-center gear, which negatively impacted software and mainframe sales.

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This article was rewritten in Wrqti's editorial style based on information from the original source above. Content is informational only — not investment advice.