IBM reported disappointing quarterly earnings, with results falling well short of Wall Street's expectations and prompting the company's biggest ever single-day share price drop of 25%. Chief executive Arvind Krishna had already pre-warned investors of the poor showing, blaming a sharp slump in mainframe hardware sales, and the firm has now also cut its full-year growth forecasts, meaning the weak quarter will weigh on results for the rest of the year.

The mainframe business, historically a reliable cash generator for the 115-year-old company, fell 42% in the quarter, which matters disproportionately because IBM earns three dollars in software revenue for every dollar of mainframe hardware sold. Krishna and finance chief Jim Kavanaugh said "tens" of customers due to buy new mainframes instead diverted spending to other hardware after data centre and PC prices rose by 15% to 30%, a cost surge driven by the broader AI infrastructure boom. Despite this, the pair insisted the shift was temporary, said some deferred purchases had already resumed this quarter, and maintained there was "no evidence" of clients abandoning mainframes altogether, even as overall revenue ($17.2 billion) and profit ($2.2 billion) still comfortably exceeded costs.