Shares of software and IT services companies fell on Tuesday after International Business Machines (IBM) reported preliminary results that met analysts’ expectations, rekindling questions about the sector.IBM shares fell as much as 26%, on track for their biggest one-day decline since at least 1968. The company reported that it missed expectations as customers shifted capital spending away from IBM’s products to chips and servers.
Software peers were dragged down by Microsoft with a 2% decline, Workday with a 6.3% decline, Salesforce with a 3.2% decline and Autodesk with a 2.4% decline. US-listed shares of SAP SE fell 3.4%. The iShares Expanded Tech-Software Sector ETF, a proxy for the software sector, fell 2.7% before paring that decline. Shares of IT services companies also declined, with Accenture falling 2.9%, Cognizant 2.2% and Infosys 2.8%.Adam Crisafulli, founder of Vital Knowledge, wrote, “IBM’s results would be a devastating blow to software/services stocks as investors will worry about the capital spending having a negative impact on the entire industry.” The company reported preliminary second-quarter revenue of $17.2 billion, which fell short of the $17.9 billion estimated by Wall Street.Software and IT services stocks have been under pressure throughout this year, as investors worry that the spread of AI will reduce demand for their services. The iShares Software ETF is down more than 12% in 2026, compared with a gain of more than 78% for the Philadelphia Semiconductor Index.(Bloomberg)