IBM Shares Plunge 25% After 42% Mainframe Sales Drop Cuts 2026 Forecast
Updated
Updated · TechCrunch · Jul 22
IBM Shares Plunge 25% After 42% Mainframe Sales Drop Cuts 2026 Forecast
3 articles · Updated · TechCrunch · Jul 22
Summary
IBM shares sank 25% after the company posted quarterly results below Wall Street expectations and reduced its full-year growth outlook.
A 42% drop in mainframe sales drove the miss, hitting IBM’s infrastructure unit and pressuring software revenue because the company says each $1 of mainframe hardware supports about $3 of software sales.
IBM reported $17.2 billion in revenue, roughly $2.2 billion in net income and nearly 58% gross margins, but those figures still fell short enough that management had warned investors in advance.
Arvind Krishna said tens of customers delayed mainframe purchases after 15% to 30% cost increases for other data-center gear and PCs diverted budgets, though he said some orders have already returned this quarter.
The setback shows how the AI hardware boom that had supported IBM’s stock under Krishna also raised component costs across enterprise tech, squeezing demand for its legacy cash-cow systems.