Shares of software and IT services companies plunged Tuesday after International Business Machines (IBM) reported preliminary results that missed analyst expectations, reigniting questions about the sector.IBM shares plummeted as much as 26%, on track for their biggest one-day drop since at least 1968. The company reported that it missed expectations because customers shifted capital spending from IBM’s products to chips and servers.
Software peers were dragged lower as Microsoft fell 2%, Workday dropped 6.3%, Salesforce shed 3.2%, and Autodesk slid 2.4%. US-listed shares of SAP SE fell 3.4%. The iShares Expanded Tech-Software Sector ETF, a proxy for the software sector, slumped as much as 2.7% before paring that decline. Shares of IT services companies also tumbled with Accenture dropping 2.9%, Cognizant declining 2.2%, and Infosys falling 2.8%.IBM’s results “will deliver a devastating blow to software/services stocks as investors will worry about the capex pivot negatively impacting the whole industry,” wrote Adam Crisafulli, founder of Vital Knowledge. The company reported preliminary second-quarter revenue of $17.2 billion, short of the $17.9 billion Wall Street had been anticipating.Both software and IT service stocks have been pressured throughout this year, as investors fret that the proliferation of AI will reduce demand for their services. The iShares software ETF is down more than 12% in 2026, compared with a gain of more than 78% for the Philadelphia Semiconductor Index.(Bloomberg)
