IBM plunges 24% pre-market! The CEO warns that Q2 missed the mark, as customers put all their budgets into a mad rush for memory.

IBM unexpectedly and early on Tuesday (7/14) released its preliminary second-quarter earnings report. Adjusted earnings per share came in at $2.93, while revenue totaled $17.2 billion—both missed market expectations. In pre-market trading, the stock price kept falling deeper and deeper; at one point, the decline widened to 24%, and Dow futures were also dragged down by as much as 250 points. CEO Arvind Krishna pointed to a memory-buying frenzy, saying that customers shifted capital expenditures to snapping up servers, storage, and memory by the end of June, displacing orders for mainframes and software.
(Background: Don’t just look at SK hynix—see global memory-related stocks all at once: pricing set in South Korea, the supply-chain crunch biting in Taiwan, and Japan’s hidden champions)
(Background addition: AI devours memory, and $100 low-priced smartphones may disappear from the market)

Key summary

• IBM unusually released its preliminary Q2 results ahead of schedule: EPS of $2.93 and revenue of $17.2 billion both below expectations; pre-market losses at one point widened to 20%
• CEO Krishna: customers shifted capital spending at the end of June toward servers, storage, and memory to secure supply ahead of price increases
• Infrastructure segment revenue fell 7% year over year; mainframe Z systems and transaction processing software are the hardest hit; the official financial report will be released on 7/22

The memory supercycle has pushed up the stock prices of Micron and SK hynix, but now the first century-old tech giant has been sunk by the same wave that is sweeping the industry. On Tuesday (7/14), IBM unusually issued an early warning before the official earnings day, and the preliminary second-quarter figures missed across the board: adjusted EPS was $2.93, below the market’s $3.01 expectation; revenue was $17.2 billion, up only 1% year over year, also below analysts’ estimate of $17.86 billion.

At present, IBM’s share price in pre-market trading is falling further and further, with the decline widening from more than 13% to about 24% by the time of this writing. Dow futures were also dragged down by as much as 250 points at one point.

IBM had planned to release its official earnings report on July 22. By making its position known a week early, it effectively told the market that the “hole” this quarter is too big to hide.

All the money went into抢 memory

In a letter to investors, CEO Arvind Krishna attributed the miss to a sudden procurement shift:

In the last few weeks of June, we saw customers shift quarterly capital expenditures toward servers, storage, and memory purchases, securing scarce infrastructure supply before the expected price increases.

He said corporate customers’ IT budgets are a zero-sum game: first, the money goes to抢 memory and servers ahead of price hikes, and then the signing hands shrink back when it comes to software and mainframe contracts. Reflected in the segment figures, IBM’s Infrastructure (Infrastructure) segment revenue fell 7% year over year. The biggest trouble spots are its mainframe Z systems (IBM’s enterprise-class mainframes—the backbone of bank core systems and airline reservation systems) and the accompanying transaction processing software; software segment revenue rose 5% year over year, while the consulting business was roughly flat.

The other side of the memory supercycle

This pre-announcement is essentially a reverse footnote to the recent memory rally. Over the past few weeks, news about DRAM price increases and HBM shortages has pushed memory-related stocks higher one after another. SK hynix ADRs have been shining on the listing boards, and Micron has been stepping up investment in the United States. But when the same buying frenzy flowed to IBM, it turned into a financial-results mine: orders were squeezed out. The fear of price hikes ran faster than the price hikes themselves. That saying first held true in the DRAM spot market—and now it also holds true for IBM’s earnings.

The next observation point is the official earnings report on July 22. Whether IBM will cut its full-year guidance, and whether other software and advisory providers that also consume enterprise IT budgets will show the same squeeze-out effect, will determine whether this is an execution issue for IBM alone—or a chain reaction across the entire enterprise technology sector.

Common questions

Why did IBM’s stock plunge pre-market?

IBM unusually and early released its preliminary second-quarter earnings report on July 14, 2026 (7/14). Adjusted earnings per share was $2.93, and revenue was $17.2 billion—both below the market’s expectations of $3.01 and $17.86 billion, respectively. In pre-market trading, the decline at one point widened to 20%.

What does memory price increases have to do with IBM’s earnings miss?

CEO Arvind Krishna said customers, in the last few weeks of June, shifted quarterly capital expenditures to servers, storage, and memory purchases, displacing orders for mainframes and software. This led to a 7% year-over-year decline in Infrastructure segment revenue.