July 14 (Reuters) – IBM’s preliminary second-quarter revenue forecast came below Wall Street estimate on Tuesday, as customers prioritized spending on AI infrastructure, including servers, storage and memory purchases, sending its shares slumping 17% in premarket trading.
The results reflect an industry-wide shift in technology spending toward AI infrastructure, reducing budgets for traditional software.
According to the preliminary results, the company expects revenue of $17.2 billion during the quarter, compared with analysts’ estimate of $17.86 billion, according to data compiled by LSEG.
Adjusted earnings per share is expected to be $2.93, compared with the estimate of $3.02.
IBM CEO Arvind Krishna said in a letter to investors that in this quarter the company “faltered” in adapting quickly enough to the evolving market conditions, leading to “numerous large deals” not closing as expected.
(Reporting by Harshita Mary Varghese in Bengaluru; Editing by Shilpi Majumdar)
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