IBM shares fell 25 per cent after the company warned that second‑quarter revenue grew only 1 % versus the 5 % analysts expected. Chief executive Arvind Krishna blamed a broad market shift, saying customers are diverting regular IT budgets toward AI‑focused server, storage and memory equipment, which hit mainframe and software sales. A cyber‑security scare linked to Anthropic’s Mythos model further disrupted spending plans.

The sharp drop signals investor fear that the AI infrastructure boom is crowding out traditional IT spending. Software vendors such as ServiceNow and Adobe also slid, while device makers face higher component costs for PCs, consoles and smartphones.

Krishna noted a rush to buy AI hardware before memory‑chip price rises take effect, creating timing volatility. Rising chip margins — Nvidia at 75 per cent and Micron at 83 per cent — consume a larger share of capex, limiting AI supply and keeping service prices elevated.