IBM shares tumble after CEO warns customers to assess true AI ROI despite earnings beat
IBM reported third‑quarter revenue of $17.1 billion, up 5% year‑over‑year, and beat Wall Street estimates. In the earnings call, CEO Arvind Krishna said large enterprises are now weighing the “true ROI” of AI spending, prompting concerns that AI budgets could be curtailed. The comment sent IBM’s stock down about 7% in pre‑market trading, affecting funds that hold sizable IBM positions.
Why it matters
The share decline reduces the value of ETFs with notable IBM exposure, such as the First Trust NASDAQ Technology Dividend Index Fund, which holds 8.65% of its assets in IBM. The drop also highlights investor sensitivity to AI‑spending sentiment, which could influence future earnings expectations.
Key facts
- 1Quarterly revenue rose 5% year‑over‑year to $17.1 billion. seekingalpha.com
- 2IBM’s shares fell about 7% in morning trading after the earnings release. finance.yahoo.com
- 3CEO Arvind Krishna said customers are now evaluating the "true ROI" of AI spending. finance.yahoo.com
- 4IBM raised its free‑cash‑flow outlook, now expecting more than $1 billion of growth this year. finance.yahoo.com
- 5The company declared a quarterly dividend of $1.69 per share, payable December 10. finance.yahoo.com
- 6The First Trust NASDAQ Technology Dividend Index Fund (TDIV) held 8.65% of its assets in IBM as of October 21. finance.yahoo.com
Summary written by AlphAI AI Desk from 2 of 2 sources. Not investment advice. Figures are as stated by the linked sources.