IBM warning triggers broad selloff in software and consulting stocks

EarningsIndustry Impact 4
โดย TheStreet·Read original
Summary · why it matters

IBM shares plunged as much as 23% on Tuesday after CEO Arvind Krishna disclosed preliminary second-quarter revenue of $17.2 billion and adjusted earnings of $2.93 a share, both missing analyst estimates. The shortfall was driven by clients redirecting budgets toward servers, storage, and memory in late June to beat expected price hikes, causing infrastructure revenue to fall 7% while software grew 5% and consulting was flat. The selloff spread to rivals with no direct mainframe exposure, sending ServiceNow down nearly 7%, Salesforce down 5%, and Accenture and Cognizant down 8% and 7%, respectively, as investors feared a broader shift from software to hardware spending. Wall Street analysts split on the outlook, with HSBC downgrading IBM to Reduce and cutting its target to $191 from $231, while Oppenheimer raised its target to $350 from $320 and Morgan Stanley lifted its target to $293 from $267. The memory shortage behind the hardware rush stems from Samsung, SK Hynix, and Micron prioritizing AI data center chips, leaving standard enterprise memory effectively sold out.

Impact on stocks 16

Artificial Intelligence± Mixed · 7 stocks
Accenture plc
ACN
▼ NegativeDemandrelevance

Investors feared a broader shift from software to hardware spending, impacting Accenture as a consulting firm.

Salesforce.com Inc
CRM
▼ NegativeDemandrelevance

Investors feared a broader shift from software to hardware spending, impacting Salesforce as a software company.

ServiceNow Inc
NOW
▼ NegativeDemandrelevance

Investors feared a broader shift from software to hardware spending, impacting ServiceNow as a software company.

Cloud & Digital Infrastructure▲ · 4 stocks
Financials▲ · 3 stocks
Semiconductors▲ · 2 stocks
SK Hynix Inc
000660
▲ PositiveSupplyrelevance

Memory shortage driven by SK Hynix prioritizing AI data center chips, leaving standard enterprise memory sold out, which is positive for SK Hynix's pricing power.

Micron Technology Inc
MU
▲ PositiveSupplyrelevance

Memory shortage driven by Micron prioritizing AI data center chips, leaving standard enterprise memory sold out, which is positive for Micron's pricing power.

Theme Impact 7

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