IBM (NYSE: IBM) shares fell 25.2% on Tuesday, the company’s worst single-day decline in more than a century, after it released preliminary second-quarter earnings a week ahead of schedule that fell well short of Wall Street’s expectations.
The stock closed around $217, wiping out an estimated $59 billion to $67 billion in market value and pushing IBM into bear market territory, down 26% for the year. The decline topped the previous record set during the Black Monday crash of October 1987, when IBM fell roughly 23%.
The company reported adjusted earnings per share of $2.93 on revenue of $17.2 billion, missing analyst expectations of $3.02 and $17.86 billion. CEO Arvind Krishna attributed the shortfall to a late-quarter rush among clients to lock in hardware purchases before prices climbed further, pulling capital expenditures away from the software and infrastructure lines tied to IBM’s newly launched z17 mainframe.
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“This quarter we faltered,” Krishna wrote in his letter to investors.
The earnings warning came amid a broader global memory chip shortage, as manufacturers including Samsung, SK Hynix, and Micron redirect production toward chips used in AI data centers, driving up prices for the memory used in ordinary servers and PCs. The selloff briefly dragged down other software companies, with Salesforce and Microsoft both dipping before recovering some ground.
The crash landed one day after Jim Cramer told a caller on his CNBC show “Mad Money” to buy the stock, calling it “terrific” and praising Krishna’s execution.
“I want you to buy the stock,” Cramer said on July 9. The moment fed into “Inverse Cramer,” a running joke among stock watchers on X and Reddit that bets against Cramer’s calls; the informal Inverse Cramer index is down about 0.1% for the year against a 10% gain for the S&P 500, though it came out ahead on IBM specifically.
Cramer himself declined to recommend buying the dip, telling CNBC viewers Tuesday he couldn’t tell people to buy a stock “because I hope something is true.”
It’s the second sharp selloff for IBM this year. The stock fell 13.2% in February, its biggest one-day drop since 2000, after concerns that AI coding tools could automate work central to IBM’s legacy COBOL modernization business.
IBM is scheduled to report its full second-quarter results and hold an earnings call on July 22.
