technology
IBM says AI spending shift cut mainframe sales but boosted Red Hat software growth
Business Insider reported that IBM alerted investors to customers redirecting technology budgets toward AI infrastructure and cybersecurity. Purchases of servers, storage, and memory in late June exceeded expectations and cut into mainframe revenue. IBM shares fell nearly 25 percent while memory and security stocks rose.
Jul 14, 3:01 PM·1m read1 source
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IBM warned investors of a shift in technology budgets driven by AI spending. Business Insider reported that customers spent the final weeks of June 2026 buying servers, storage, and memory to lock in supply before expected price increases. Those purchases exceeded IBM's expectations and reduced sales of its new Z mainframes and related software.
The company stated that rapidly evolving cybersecurity concerns delayed numerous large deals. Business Insider reported that the spending shift left less money available for other technology purchases. IBM's Red Hat and other software businesses showed accelerating revenue growth.
IBM's stock fell nearly 25 percent following the warning. Shares of SK Hynix rose more than 20 percent on Nasdaq on Tuesday. Shares of CrowdStrike and Palo Alto Networks also rose after the announcement.
IBM is scheduled to report Q2 results on July 22, 2026.
