IBM Stock's Historic Selloff: Buy the Dip Ahead of Q2 Earnings, or Is It Too Risky?

IBM stock plummeted 25% in one of its worst single-day declines in history after the company issued a preliminary Q2 earnings warning ahead of its July 22 report, citing weaker-than-expected enterprise spending and delayed customer contracts. IBM's Q2 revenue is expected at approximately $17.2 billion versus the $17.85 billion consensus, with adjusted EPS of $2.93 missing the $3.02 estimate, driven by softness in Software and Infrastructure segments and customers reallocating budgets toward AI infrastructure investments.

Why it matters: Investors will look to the full Q2 report for updated full-year guidance, Red Hat growth trends, AI consulting bookings, infrastructure demand outlook, and free cash flow plans, while IBM maintains its long-term AI strategy centered on Watsonx and Red Hat hybrid cloud.