IBM Plunges 25% as CEO Blames AI Chip Costs
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- IBM shares crashed 25.2% to roughly $217 at Tuesday's close, erasing about $67 billion in market cap and marking the worst single-day loss in the company's 115-year history — surpassing even the 23% Black Monday plunge of October 19, 1987.
- CEO Arvind Krishna admitted in a letter to investors that Q2 "was worse than our expectations" and that IBM "did not adapt and move quickly enough," blaming a shortfall in Z performance and the associated software stack, particularly in Transaction Processing.
- Customers shifted quarterly capex away from software and toward servers, storage, and memory to lock in supply-constrained AI infrastructure ahead of expected price hikes, a magnitude of reprioritization IBM said it failed to anticipate.
- Krishna said Anthropic's release of "Mythos" — an AI model Anthropic claimed could enable hackers to identify cybersecurity vulnerabilities before they're detected — stalled multiple large IBM deals as clients weighed the implications.
- IBM is scheduled to report Q2 results on July 22, with FactSet analysts estimating $17.2 billion in revenue and $2.93 in earnings per share, reflecting annual growth of just 1.3% and 3.5% respectively.
- This is IBM's second Anthropic-driven selloff in six months; in February its stock dropped 13% — then its worst day since 2000 — after Anthropic unveiled an AI tool designed to streamline updates for COBOL.
Why it matters: IBM's $67 billion single-day wipeout — worse than its 1987 Black Monday loss — shows how exposed legacy software providers are to AI-driven shifts in enterprise spending. With Anthropic's models now directly stalling IBM deals and hardware scarcity squeezing margins, the July 22 earnings print becomes a critical test of whether IBM's mainframe and software stack can hold value in an AI-first capex environment.
