IBM shares plunged over 24% Tuesday after the company missed quarterly expectations and revealed that customers are shifting their budgets away from its AI software and mainframes. CEO Arvind Krishna attributed the shortfall in part to clients reallocating capital spending toward hardware components—citing expected price increases driven by a global memory-chip shortage. The company's infrastructure revenue fell 7%, and Krishna acknowledged that IBM failed to adapt quickly enough, causing large deals to slip. The warning rippled through the tech sector, dragging down Salesforce and Microsoft, as the memory crunch has squeezed supply of chips used in servers and PCs, with manufacturers like Samsung and SK Hynix sold out of AI-focused capacity through 2026.