IBM Plunges 25% in Worst Single-Day Drop on Record After Pre-Announcement Miss

IBM shares cratered roughly 25% in a single session, marking the worst day on record for Big Blue, after the company issued a pre-announcement revealing a $700 million revenue shortfall and adjusted earnings per share of $2.93 versus the $3.01 consensus. The stunning sell-off, discussed on Episode 810 of the podcast DH Unplugged, caught markets off guard and underscored a broader reallocation of corporate technology budgets toward AI servers, memory, and hardware at the expense of software purchases.

According to the episode, hosted by John C. Dvorak and Andrew Horowitz, IBM management warned that customers are redirecting spending toward AI-related infrastructure, delaying software deals. The revenue miss and profit warning sent shockwaves through the technology sector, though rivals Dell and Hewlett Packard Enterprise saw their shares rise 7% and nearly 5%, respectively, on the same day—a divergence Horowitz attributed to what he calls "cradling," or algorithmic rotation that props up indices while individual names get hit hard.

Horowitz drew a parallel to the 2007-2008 letters-of-credit squeeze, sharing an anecdote from a weekend gathering with commercial real estate developers and plumbers who described stalled projects and frozen loan draws. The hosts argued that IBM's troubles may signal a broader slowdown in enterprise software spending, even as AI hardware demand surges.

The episode also covered blockbuster bank earnings, with JPMorgan reporting $21 billion in net revenue, Bank of America $9.1 billion in net income, Goldman Sachs $6.6 billion in profit, and Citigroup net income up 45%. Meanwhile, SK Hynix's $26.5 billion NASDAQ ADR listing was oversubscribed seven times, and oil prices pushed toward $80 after President Trump walked back a proposed 20% Strait of Hormuz reimbursement fee.

On the AI front, the hosts examined Odysseus: The Fall, a 135-minute AI-generated feature film produced for mid-five figures, launching alongside Christopher Nolan's $250 million Odyssey. They also discussed Apple's lawsuit against OpenAI over alleged trade-secret theft involving former hardware chief Tang Tan and Chang Liu, noting that more than 400 ex-Apple employees now work at OpenAI. Stock picks included Amazon and Micron, both long positions.

The full episode is available at dhunplugged.com and on Apple Podcasts, Spotify, and Amazon Music.