Why IBM’s Stock Took a Big Tumble: Explained Simply

Photo note: People work on the floor of the New York Stock Exchange (NYSE) on July 07, 2026 in New York City. (Spencer Platt | Getty Images)

What Happened to IBM’s Shares?

On Tuesday, a company called International Business Machines (IBM) — which makes computer hardware (physical machines), software (programs), and offers consulting help — saw its shares (tiny ownership slices of the company) drop by a lot. "Double digits" means the drop was more than 10%.

This happened after IBM released a preliminary (early) report card for the second quarter of the year (April through June) that turned out worse than many people expected.

Important Point: Shares tumbled more than 17% in premarket trading (buying and selling before the normal stock market opens). That is a very big drop for a giant company!

Understanding the Numbers (Earnings and Revenue)

Let’s break down the key facts in a kid-friendly way:

• Adjusted earnings: IBM said it made $2.93 for each share (imagine the company’s profit divided evenly across every tiny slice).
• Revenue: The total money IBM collected from selling things was $17.2 billion.
• What experts expected: Analysts (people whose job is to study companies and guess their numbers) thought IBM would earn $3.01 per share and bring in $17.86 billion in revenue. This guess came from a data company called FactSet.

So IBM earned less profit per share and collected less total money than the experts predicted.

Why Did This Happen? (CEO’s Explanation)

The top boss of IBM is called the CEO (Chief Executive Officer), and his name is Arvind Krishna. He said the shortfall happened because two parts of the business — software (computer programs) and infrastructure (the behind‑the‑scenes tech like big computers) — were weak.

Why were they weak? Because IBM’s customers (other companies that buy from IBM) moved their money toward buying hardware (physical stuff like memory chips, servers, and storage boxes).

Here is what Krishna wrote to IBM investors, translated into plain English:

"In the last few weeks of June, we saw clients shift their quarterly capex spend — that’s capital expenditure, meaning the money they planned to spend on big, long‑lasting items — toward servers, storage, and memory purchases. They did this to grab limited supplies before prices went up."

He added that IBM knew some supply chain (getting parts from factories to customers) bumps might happen, but they didn’t expect such a huge shift in spending.

Krishna also admitted the company made mistakes:

"These conditions require our teams to execute perfectly, and this quarter we faltered. We did not adapt and move quickly enough, and numerous large deals failed to close on the timelines we expected, driving the majority of our shortfall."

In simple words: They stumbled, were too slow, and some big sales didn’t finish in time, causing most of the miss.

Step‑by‑Step: How the News Unfolded

1. IBM released preliminary (early) second‑quarter numbers on Tuesday.
2. The numbers showed lower earnings and revenue than analysts expected.
3. Investors got worried, and IBM’s stock price dropped over 17% before the market officially opened.
4. The CEO explained that customers spent more on hardware, hurting software and infrastructure sales, and IBM’s own team didn’t react fast enough.

A Note on This Being Breaking News

Important Point: The original report said: "This is breaking news. Please refresh for updates." That means the story is still developing, and new details may appear later.

Summary

IBM’s stock fell hard after it reported early quarterly results that missed expectations. The company made $2.93 per share on $17.2 billion revenue, below the hoped‑for $3.01 per share and $17.86 billion. The CEO explained that customers shifted spending to hardware like memory chips, and IBM’s own execution was imperfect. Shares dropped over 17% in premarket trading. This is a breaking story from CNBC, and more updates may come.

FAQ

Q1: What is a "share" of a company?
A share is a tiny piece of ownership in a company. If you own a share, you own a small part of that business and can benefit if it does well.

Q2: What does "premarket trading" mean?
Normally, stock markets have set hours during the day. Premarket trading is when people buy and sell shares before those official hours begin. Big news can cause big price moves at that time.

Q3: Why do analysts’ expectations matter?
Analysts study companies and make educated guesses about their performance. If a company does worse than those guesses, investors may lose confidence and sell their shares, dropping the price.

Q4: What is "capex"?

Q5: Where can I read more from this source?
The original article came from CNBC. They invite readers to choose CNBC as a preferred source on Google so they never miss business news updates from "the most trusted name in business news."