IBM shares plunged more than 20% after the US technology group issued a profit warning and acknowledged it had failed to adapt quickly enough to a shift in corporate spending towards data-centre infrastructure.
The stock fell nearly 24%, marking its biggest one-day drop since 1987 and triggering broader weakness across the software sector.
Microsoft, ServiceNow, Salesforce and Intuit fell between 3% and 5% as investors reassessed the impact of AI and changing enterprise technology budgets.
IBM said customers had redirected capital expenditure towards servers, storage and memory in order to secure supply-constrained infrastructure ahead of expected price increases.
Chief executive Arvind Krishna said the company had underestimated the scale of the spending shift and that numerous large software deals failed to close as expected.
IBM now expects second-quarter revenue of US$17.2 billion, below analysts’ forecasts of US$17.86 billion.
Adjusted earnings per share are expected to be US$2.93, compared with the US$3.02 anticipated by analysts.
The warning added to existing investor concerns that AI tools capable of automating routine work could pose a significant threat to traditional software companies.
