IBM Suffers Historic $70 Billion Market Blow After CEO Admits Company Fell Behind In AI

Published 15 July 2026 · tech

IBM Suffers Historic $70 Billion Market Blow After CEO Admits Company Fell Behind In AI Published By, Last Updated: July 15, 2026, 08:10 IST IBM

IBM Suffers Historic $70 Billion Market Blow After CEO Admits Company Fell Behind In AI Published By, Last Updated: July 15, 2026, 08:10 IST IBM shares plunged 25% after CEO Arvind Krishna admitted the company had "faltered" in adapting to the AI boom, raising fears of weaker quarterly earnings. Rapid Read Arvind Krishna, Chairman and CEO of IBM. IBM is staring at what could be the biggest one-day loss in its 115-year history after CEO Arvind Krishna admitted the company was slow to respond to the rapid changes brought by the artificial intelligence (AI) boom. The admission sent investors rushing for the exit on Tuesday, dragging IBM shares down 25%. If the losses remain, the technology giant is set to lose nearly $70 billion from its market value of $272.78 billion, making it one of the worst trading days the company has ever seen, worse even than the 1987 “Black Monday" crash. Speaking to investors, Krishna said IBM had “faltered" and failed to “adapt and move quickly enough" as AI began reshaping customer spending across the technology industry. AI Boom Changed Where Clients Are Spending IBM said several large deals it had expected to close during the second quarter failed to go through after customers shifted their budgets towards AI-related infrastructure. The Armonk, New York-based company, which provides enterprise software, IT consulting services and mainframe computers to governments and large businesses, now expects the change in spending patterns to weigh on its second-quarter performance.

Explaining what happened in the closing weeks of June, Krishna said: “In the last few weeks of June, we saw clients shift their quarterly capex spend toward servers, storage, and memory purchases to secure supply-constrained infrastructure ahead of expected price increases." He added: “While we anticipated some supply-chain related impact in our expectations, we did not anticipate the magnitude of the capex reprioritisation." Traditional Software Budgets Took A Back Seat Krishna’s comments highlighted a broader trend that has been building across the technology sector. As businesses race to adopt AI, many are redirecting technology budgets towards servers, chips, storage and networking equipment needed to support AI systems. That has left fewer resources for traditional software investments, an area where IBM admitted it did not move quickly enough to respond to changing customer priorities. The company also expects weakness in its mainframe business, which supplies high-powered computers and software used by banks, airlines and other large enterprises to process critical transactions. Cybersecurity Is Becoming A Bigger Priority IBM also said businesses are increasing spending on cybersecurity as AI makes cyber threats more advanced. Krishna pointed to Anthropic’s advanced Mythos model, saying it has demonstrated the ability to uncover vulnerabilities in existing software and encryption systems. Warning Ripples Across The Software Sector The market reaction was not limited to IBM.