IBM’s record crash drags Asian IT stocks lower

IBM International Business Machines Corporation ↗ 3.65% shares suffered their worst single-day collapse in nearly six decades on Tuesday, July 14, plunging roughly 25% and wiping out nearly $70 billion in market capitalization after the company warned that enterprise clients are diverting budgets away from software and consulting toward AI infrastructure. The fallout swept across Asian IT stocks on Wednesday, pulling down Indian and Japanese technology services firms as investors braced for weaker demand ahead.cnbc+1

Indian IT Sector Under Pressure

The Nifty IT Index fell around 1.75% on Wednesday to an intraday low near 28,223.80, underperforming the broader market as the Nifty 50 and Sensex each gained about 0.5%. Infosys ↗ 4.12% and Wipro ADRs had already declined 4% and 3% respectively in US trading following IBM's warning, setting the tone for Wednesday's session in Mumbai.angelone

IBM reported preliminary second-quarter revenue of $17.2 billion — missing the $17.9 billion consensus — and adjusted earnings per share of $2.93 versus expectations of $3.01. CEO Arvind Krishna acknowledged the company "did not adapt and move quickly enough," noting that customers shifted spending toward AI servers, storage, and memory at the expense of software deals and consulting engagements.disruptionbanking+1

The timing amplified the damage for Indian IT. TCS Tata Consultancy Services Limited, which went ex-dividend on July 15, and peers including Infosys and Wipro face their own quarterly earnings reports in coming days, and IBM's commentary raised concerns that similar budget reallocation could affect outsourcing demand.indiatoday+1

Japanese IT Services Hit Hard

In Tokyo, system developers bore the brunt even as the broader Nikkei 225 rose 1.49%, buoyed by chip stocks and ASML's ↘ 2.55% strong earnings outlook. NEC fell 4.32%, Fujitsu lost 4.7%, Nomura Research Institute dropped 2.51%, and consulting firm BayCurrent Consulting slid 6.79%, according to Reuters.arabnews

The AI Budget Squeeze

Reuters reported that IBM's warning represented "the starkest sign yet of AI's growing toll on the sector," as enterprises funnel capital toward data-center hardware rather than the software licenses and consulting projects that sustain companies like IBM, Accenture ↗ 5.95%, and their Indian and Japanese counterparts. IBM's full earnings call is scheduled for July 22, where investors will seek further clarity on whether the spending shift is temporary or structural.reuters+1