IT Stocks Slip As IBM Share Price Plunges 25% On Weak Revenue Outlook

The Nifty IT index was trading up to 1% lower during the morning session on Tuesday, with Infosys, Tata Consultancy Services and Persistent Systems leading the decline. The move followed a sharp overnight fall in IBM share price after the U.S. technology company reported preliminary second-quarter revenue below market expectations.

IBM share price plunged 25% to $217.07, marking its biggest single-day decline since at least 3 January 1968, based on available pricing data. The fall came after IBM reported preliminary second-quarter revenue of $17.2 billion, below analysts’ estimate of $17.9 billion.

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The company’s infrastructure division, which includes mainframe computers, reported a 7% decline in sales during the quarter.

IBM Points To Shift In Customer Spending

IBM CEO Arvind Krishna said in a letter to investors that the company had expected supply-chain challenges to affect its results. However, customer spending also shifted towards servers, storage and memory as companies sought to protect themselves from possible price increases.

Krishna said the impact was worse than expected and that IBM had not adjusted quickly enough to the change in spending patterns. He also said the company’s Z mainframes and related software accounted for a significant portion of the shortfall, with several large deals failing to close within the expected timelines.

The sharp decline in IBM share price initially affected other U.S. software companies, including ServiceNow and Workday, although both later recovered some of their losses during the session.

Softer U.S. Inflation Supports Broader Market

The decline in IT stocks came even as Indian benchmark indices opened higher. At 9:35 a.m. on 15 July, the Sensex and Nifty were trading around 0.7% higher after U.S. inflation data for June came in below economists’ expectations.

Lower-than-expected U.S. inflation can ease immediate concerns over further interest-rate increases and reduce pressure on emerging-market currencies. It can also support foreign flows into risk assets, providing some support to the broader Indian market.

For Indian technology companies, the overnight movement in IBM share price has placed global technology spending trends back in focus, particularly the allocation of corporate budgets towards artificial intelligence infrastructure, servers and memory. The domestic IT sector will continue to be tracked alongside global technology earnings and developments in U.S. markets as the broader earnings season progresses.