IBM shares plunge after preliminary Q2 revenue falls short of estimates despite surging AI bookings

TL;DR

IBM shares fell sharply after preliminary Q2 revenue came in below estimates despite AI bookings topping $12 billion cumulatively.

IBM issued preliminary second-quarter results on Monday showing revenue of roughly $17 billion, up one percent year over year but well below the $18 billion that analysts had expected. Shares fell as much as 17 percent in premarket trading, erasing weeks of gains that had been fuelled by bullish analyst coverage and a stock rally of 30 percent in May alone. CEO Arvind Krishna called the results disappointing in a letter to investors.

The miss was broad. Software revenue rose five percent, with Red Hat up 11 percent, but both fell short of forecasts, while consulting was essentially flat and infrastructure revenue dropped seven percent as clients pulled back on mainframe and storage purchases. Krishna blamed execution issues including large deals that failed to close, and said some clients...

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