New York — IBM shares fell 25 percent on Tuesday, erasing roughly $70 billion in market value, after the company issued a surprise warning with preliminary second-quarter results that missed Wall Street expectations. The technology company reported revenue of $17.2 billion for the quarter ending in June, up just 1 percent from a year earlier and below analyst forecasts, while earnings per share were $2.93 compared with a FactSet consensus of $3.01. IBM issued the warning a week before its scheduled earnings report, marking the company’s first such alert since the early 2000s and rattling investor confidence in its near-term growth prospects. Chief Executive Arvind Krishna attributed the shortfall to a rapid shift in customer spending toward servers, memory chips and other hardware ahead of expected price increases, as well as delayed large deals and AI-driven budget reallocations that pulled money away from software and IT services. The infrastructure business, including IBM’s flagship mainframe line, saw revenue fall 7 percent, while software revenue grew 5 percent but still missed expectations; Red Hat revenue rose 11 percent, and server and storage sales outside mainframes surged 37 percent. IBM said heightened cybersecurity concerns following Anthropic’s Mythos AI model release led clients to prioritize cyber defenses, and it announced Lightwell, a $5 billion initiative to fix vulnerabilities in open-source software with backing from Bank of America, JPMorgan Chase and Goldman Sachs. Shares of Adobe and Salesforce also declined after IBM’s warning, and the selloff sent the company’s stock down 33.93 percent from its all-time closing high, while activity in the IBM options market spiked, with $230 puts soaring in value.

Prepared by Christopher Adams and reviewed by editorial team.