IBM warns AI boom squeezing software budgets; shares sink in sector rout

IBM said it had “faltered” in keeping pace with a shift in corporate spending from software to data-center infrastructure and would take a big earnings hit in the second quarter, in the clearest sign yet of AI’s growing toll on the sector.

IBM’s shares tanked 25% on Tuesday, putting the stock on track for an even steeper single-day decline than it suffered during the 1987 “Black Monday” crash. Other software stocks also fell.