New york: Shares of US tech company IBM fell more than 23% in premarket trading Tuesday after its preliminary second-quarter revenue and earnings came in below market expectations. IBM reported adjusted earnings of $2.93 per share on revenue of $17.2 billion for the three months ended in June.

According to Anadolu Agency, revenue rose 1% from a year earlier, while adjusted earnings per share increased 5%, but both figures fell short of analysts' forecasts. Software revenue increased 5% year on year, consulting revenue remained unchanged, and infrastructure revenue declined 7%, as indicated by the preliminary results.

Chief Executive Officer Arvind Krishna explained that the weaker-than-expected performance was partly due to clients redirecting capital spending toward servers, data storage equipment, and memory chips. Krishna noted that customers shifted spending during the final weeks of June to secure supply-constrained infrastructure in anticipation of expected price increases.

While IBM had anticipated some supply chain effects, Krishna stated, "we did not anticipate the magnitude of the capex reprioritization." He expressed this concern in a letter addressed to investors. Additionally, Krishna acknowledged execution problems within the company, highlighting that several large transactions were not completed within the expected timeframe, which significantly contributed to the earnings shortfall.

IBM indicated that weaker performance in its mainframe-related infrastructure and transaction-processing software businesses also impacted the results. The company reported an adjusted gross profit margin of 59.4%, which is down 70 basis points from a year earlier. Meanwhile, free cash flow for the first half of 2026 totaled $4.8 billion.