IBM stock sees biggest fall in 39 years, CEO Arvind Krishna admits to investors that the company ‘failed’ to close large deals; says: In the last few weeks of June, we …

IBM suffered a historic collapse on Wall Street on Tuesday (July 14) as its stock plunged 23% – marking the company’s worst single-day performance in 39 years, CNBC reported. IBM shares dropped 23.7% on October 19, 1987. The panic was triggered after the computing, software and consulting provider released preliminary second-quarter financial results that missed Wall Street’s expectations across the board.IBM said in a statement that preliminary second-quarter revenue totaled $17.2 billion, which is below analysts’ estimates of $17.9 billion. Sales from IBM’s infrastructure division were especially hard hit, dropping 7%. The company said it is reviewing its books and final results may be slightly different. The company will post results next week.

What IBM CEO Arvind Krishna told investors

IBM CEO Arvind Krishna took responsibility for the disappointing numbers in a letter to investors, admitting the company failed to adapt to a sudden, aggressive shift in client spending.Krishna explained that the growth of AI has caused corporations to reprioritise their budgets. Instead of buying software, clients are racing to secure physical hardware like servers, storage, and specialized memory chips that have become essential to run complex AI workloads.“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,” Krishna wrote to shareholders. “While we anticipated some supply chain related impact in our expectations, we did not anticipate the magnitude of the capex reprioritization,” he added.Further, Krishna admitted that internal teams failed to move fast enough under pressure, causing the company to miss out on vital revenue. “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,” Krishna wrote.While software companies are feeling the pinch, hardware manufacturers are reaping the benefits. High-end memory chip makers like Micron and SK Hynix have emerged as the biggest winners of the current tech cycle.