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The press release: https://newsroom.ibm.com/2026-07-14-Arvind-Krishnas-Letter-to-IBM-Investors https://newsroom.ibm.com/2026-07-14-Arvind-Krishnas-Letter-t...

by rwmj 3mo ago

The press release: https://newsroom.ibm.com/2026-07-14-Arvind-Krishnas-Letter-to-IBM-Investors https://newsroom.ibm.com/2026-07-14-Arvind-Krishnas-Letter-t... With the caveat that I work for IBM but have no inside knowledge about anything important, it doesn't seem very bad to me? Overall profit is going to be down a tiny amount below expectations.

bionsystem 3mo ago
Well, the answer is in your question, it's all about expectations ; the market wanted more, didn't get it, and re-rates.
- NetMageSCW 3mo ago
  Especially when the expectations are informed by the company’s own guidance about what to expect and they are wrong. It means they missed their own predictions which doesn’t engender confidence.
- rwmj 3mo ago
  Sure, but a prediction made 3 months ago turns out to be short by a few percent at most, and that leads to a 25%+ drop in the share price? That seems weird to me.
  - bionsystem 3mo ago
    What if the market expected 25% more then reported ? Nobody "knows" what the market expects. People infer it by looking at forward valuation, company guidance, investor expectations, and many many other things happening in the world, in competition, in the value chain. And of course the market does its thing and figures that this company has x% chance of beating (or missing) by $y, and when it's wrong the moves can be huge.
  - throwway120385 3mo ago
    IME you have to be true to what you predict. Whether you're predictably growing, predictably shrinking, or predictably flat if you blow your prediction that's when people start to worry that you don't know what you're doing.
bix6 3mo ago
If I read that as an IBM investor I might fully exit. The new product flopped, growth was 1%, and the CEO sounds extremely unconfident. There are way better places to put your money given the potential for future earnings now looks incredibly weak.
- criddell 3mo ago
  Where would you put your money? Everything in the US seems to have exposure to the AI bubble. Is Europe sitting out of the AI race? Maybe some euro etf?
  - Glandalf 3mo ago
    COMEX is running lower on silver, their dumping is not sustainable. Could hit $500, $5000.
    - deleted 3mo ago
      [deleted]
  - watwut 3mo ago
    US recession will spread to everything and everyone, including or especially EU.
  - unethical_ban 3mo ago
    I'd like to know the answer as well. VTWO tracking the Russell 2000? At least you know it's an ETF that doesn't contain the big AI players.
  - bix6 3mo ago
    I work in early stage venture so that’s my primary investment focus given the outsized potential. I do have a target date 401k and a professionally managed portfolio as well (broad across asset, sector, geography) but I don’t really focus on those.
khurs 3mo ago
>In the last few weeks of June, we saw clients shift their quarterly capex spend toward servers, storage, and memory purchases to secure supply-constrained infrastructure ahead of expected price increases. This dynamic impacted client buying patterns. While we anticipated some supply chain related impact in our expectations, we did not anticipate the magnitude of the capex reprioritization. In addition, clients were distracted with rapidly-evolving, industry-wide cybersecurity concerns in the quarter.
trebligdivad 3mo ago
The EPS was a lot lower than expectation though - and I thought that was the only reason people held IBM shares, they've not traditionally grown quickly but IBM has traditionally done anything it could to get a good EPS. The other more techy side is to think that a year or so ago when everyone was climbing on AI, people were buying stocks in lots of tech companies to ride that wave; some companies (Nvidia, Samsung, Micron etc) are making a fortune from it. IBM? It's got some things it can point to it's doing in AI but it's not the big beneficiary of this wave.

by rwmj 3mo ago

bionsystem 3mo ago

Well, the answer is in your question, it's all about expectations ; the market wanted more, didn't get it, and re-rates.

NetMageSCW 3mo ago
Especially when the expectations are informed by the company’s own guidance about what to expect and they are wrong. It means they missed their own predictions which doesn’t engender confidence.
rwmj 3mo ago
Sure, but a prediction made 3 months ago turns out to be short by a few percent at most, and that leads to a 25%+ drop in the share price? That seems weird to me.
- bionsystem 3mo ago
  What if the market expected 25% more then reported ? Nobody "knows" what the market expects. People infer it by looking at forward valuation, company guidance, investor expectations, and many many other things happening in the world, in competition, in the value chain. And of course the market does its thing and figures that this company has x% chance of beating (or missing) by $y, and when it's wrong the moves can be huge.
- throwway120385 3mo ago
  IME you have to be true to what you predict. Whether you're predictably growing, predictably shrinking, or predictably flat if you blow your prediction that's when people start to worry that you don't know what you're doing.

bix6 3mo ago

If I read that as an IBM investor I might fully exit. The new product flopped, growth was 1%, and the CEO sounds extremely unconfident. There are way better places to put your money given the potential for future earnings now looks incredibly weak.

criddell 3mo ago
Where would you put your money? Everything in the US seems to have exposure to the AI bubble. Is Europe sitting out of the AI race? Maybe some euro etf?
- Glandalf 3mo ago
  COMEX is running lower on silver, their dumping is not sustainable. Could hit $500, $5000.
  - deleted 3mo ago
    [deleted]
- watwut 3mo ago
  US recession will spread to everything and everyone, including or especially EU.
- unethical_ban 3mo ago
  I'd like to know the answer as well. VTWO tracking the Russell 2000? At least you know it's an ETF that doesn't contain the big AI players.
- bix6 3mo ago
  I work in early stage venture so that’s my primary investment focus given the outsized potential. I do have a target date 401k and a professionally managed portfolio as well (broad across asset, sector, geography) but I don’t really focus on those.

khurs 3mo ago

>In the last few weeks of June, we saw clients shift their quarterly capex spend toward servers, storage, and memory purchases to secure supply-constrained infrastructure ahead of expected price increases. This dynamic impacted client buying patterns. While we anticipated some supply chain related impact in our expectations, we did not anticipate the magnitude of the capex reprioritization. In addition, clients were distracted with rapidly-evolving, industry-wide cybersecurity concerns in the quarter.

trebligdivad 3mo ago

The EPS was a lot lower than expectation though - and I thought that was the only reason people held IBM shares, they've not traditionally grown quickly but IBM has traditionally done anything it could to get a good EPS. The other more techy side is to think that a year or so ago when everyone was climbing on AI, people were buying stocks in lots of tech companies to ride that wave; some companies (Nvidia, Samsung, Micron etc) are making a fortune from it. IBM? It's got some things it can point to it's doing in AI but it's not the big beneficiary of this wave.