IBM shares plunged on July 14, hit by weak second-quarter results, and posted their biggest ever drop. IBM warned that sales of its mainframes and related software were being pressured as companies channel IT budgets into artificial intelligence infrastructure and cybersecurity.

According to foreign media outlets including Business Insider, IBM told investors ahead of its earnings release that customer technology budget shifts were bigger than expected. IBM shares closed down 25.21 percent at $217.05 in regular trading. The stock, which had closed around $290 in the previous session, widened losses during the day to mark its biggest one-day drop since 1987's Black Monday. IBM's second-quarter revenue rose 1 percent from a year earlier to $17.2 billion, but missed market expectations. Infrastructure revenue fell 7 percent.

IBM Chief Executive Arvind Krishna (아빈드 크리슈나) said in a letter to investors, "This quarter we stumbled." He said the main reason for the poor performance was that large contracts were not concluded on the expected timeline. He added that he underestimated the scale of changes in customers' spending habits and did not respond quickly enough.

The key is that companies are changing priorities within limited IT budgets. IBM explained that customers increased spending on memory chips, servers and storage to secure AI infrastructure before price increases. It said this process affected purchases of its latest Z mainframes and the software that runs them.

In the final weeks of June, customer purchase patterns shifted more sharply than IBM expected. Companies moved to secure supply by pre-buying servers, storage and memory, and the effects were reflected in mainframe revenue. IBM pointed to the changes as weakening sales of new Z mainframes and demand for related software.

Rising cybersecurity spending was another factor. IBM said many large contracts were delayed because of rapidly evolving security concerns. Barclays analysts said the comments were likely to refer to concerns tied to Anthropic's recently disclosed Mythos AI model. They assessed that as worries grow that AI can quickly find software vulnerabilities, companies are accelerating security investment over other technology projects.

Markets reacted immediately. Shares of memory makers rose, and SK Hynix jumped more than 20 percent on Nasdaq on July 14. Shares of cybersecurity companies such as CrowdStrike and Palo Alto Networks also rose. AI infrastructure and security emerged as priority investment areas, while existing enterprise systems and some software were relatively pushed back.

The key question is whether the budget shift is temporary or structural. BNP Paribas analysts wrote in an investor memo, "There were no signs yet that this trend has eased." IBM is expected to provide more explanation of its outlook in its earnings release on July 22.

Not all software businesses faltered together. Barclays said it is likely that customers are delaying mainframe purchases while absorbing higher infrastructure costs. IBM's other software businesses were relatively solid. IBM said some businesses, including Red Hat, saw revenue growth accelerate instead.

The warning shows that expanding AI investment is changing the structure of corporate IT budget allocation, beyond simple demand growth. Companies are readjusting existing spending categories rather than adding more new budget. As a result, memory, servers, storage and security are benefiting, while legacy infrastructure areas such as mainframes are competing for priority within the same budgets. IBM's warning is read as an example showing that the AI investment boom is not evenly shared across all technology companies.