As corporate investment in artificial intelligence shifts toward data center infrastructure such as servers and memory, the traditional software market is beginning to face significant pressure.
IBM, which saw a series of major contracts fall through, released earnings guidance that fell short of market expectations, causing its stock price to plummet by 25% in a single day.
On July 14 (local time), IBM projected that its second-quarter revenue would reach $17.2 billion, a 1% increase compared to the same period last year, with an adjusted earnings per share (EPS) of $2.93.
If IBM's projections hold true, the revenue growth rate will remain at its lowest level in about a year.
The disappointment was immediately reflected in the stock price.
IBM shares plunged 25% that day.
Reuters estimated that $70 billion, or approximately 100 trillion won, of the company's market capitalization of about $272.8 billion vanished in a single day.
The single-day decline was even steeper than that seen during the Black Monday market crash in 1987.
IBM pointed to a rapid shift in corporate investment priorities as the reason for the downturn.
The company explained that clients have been focusing their limited capital expenditure budgets on securing servers, memory, and storage devices necessary for AI data centers instead of traditional software.
Arvind Krishna, CEO of IBM, stated in a letter to investors, "In the last few weeks of June, we saw clients shift their quarterly capital expenditures toward purchasing servers, storage, and memory."
The explanation is that IBM suffered as a result of a surge in demand from companies rushing to secure AI infrastructure amid fears of supply shortages and rising prices.
He added, "We expected some impact from supply chain issues, but we did not anticipate that capital expenditure priorities would shift this rapidly," noting that "several large deals did not close as expected."
Reuters reported that Anthropic's AI model, Mythos, has accelerated corporate investment in security by quickly identifying vulnerabilities in existing software and encryption systems.
The shock from IBM has spread throughout the software industry.
Shares of traditional software companies, including Microsoft, ServiceNow, Salesforce, and Intuit, also fell by 2% to 5%.
Reported by Kim Jiuk | Video by Lee Ui-seon | Graphics by Yook Do-hyun | Produced by SBS Digital News
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