IBM loses a quarter of its value as AI spending reshapes IT budgets

IBM shares plunged 25% in their worst single-day drop ever after preliminary Q2 revenue of $17.2 billion came in up just 1% and below forecasts, with infrastructure down 7%. CEO Arvind Krishna said in a letter that "this quarter we faltered," blaming clients who redirected spending toward servers, storage, and memory ahead of expected price hikes, plus large deals delayed by "rapidly-evolving" cybersecurity concerns. The warning revived "SaaSpocalypse" fears and dragged down Microsoft, ServiceNow, Salesforce, and Intuit 3-5%. Barclays analysts tied the cybersecurity hesitation to Anthropic's Mythos model raising alarm over AI-driven hacking, while cybersecurity stocks rallied on the same comments. The episode shows how AI infrastructure spending is siphoning money from traditional software.

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