International Business Machines stock (IBM) slid 6% ahead of the opening bell after second quarter sales in its core software segment were lower than expected and the company did not provide a forecast for the third quarter.
IBM’s software segment, which has traditionally been a bright spot, reported sales of $7.39 billion, missing analysts’ average estimate of $7.41 billion, per Reuters. After a 30% run-up in the stock year to date, the company had little room to miss estimates.
Still, IBM’s adjusted earnings per share of $2.80 topped the Street’s expectations, and its revenue of $16.98 billion for the quarter beat estimates of $16.59 billion.
Companies’ spending on artificial intelligence infrastructure spurred demand for IBM’s latest AI-specialized mainframes. The infrastructure segment, which houses its mainframe, reported revenue of $4.14 billion, beating estimates of $3.81 billion.