IBM shares plunged over 25 per cent on the NYSE mid-Tuesday after the company issued weaker-than-expected revenue outlook, citing weakness in its software and infrastructure businesses as customers shifted spending toward AI infrastructure. The sell-off wiped out nearly $55 billion in market value. The negative sentiment spilled over to Indian IT stocks, with Infosys ADR falling as much as 3 per cent and Wipro ADR declining 1.8 per cent at 12 PM EDT.

The sudden downturn abruptly stalled a recent relief rally enjoyed by Indian IT stocks, which had gained positive momentum following stable quarterly performances from TCS and HCLTech.

The sector-wide rout was ignited by IBM releasing its preliminary second-quarter results ahead of schedule. The enterprise heavyweight projected revenue and profit metrics that fell noticeably short of Wall Street estimates. IBM noted that global enterprise clients drastically shifted their capital expenditures toward data-centre hardware to lock in supply before anticipated price increases, leaving significantly less room in corporate budgets for traditional software and IT consulting services.

Pareekh Jain, founder and CEO, EIIR Trend, noted that the sharp correction in Infosys and Wipro ADRs is a direct reflection of fragile investor sentiment rather than immediate fundamental decay within the Indian firms.

“IBM results have disappointed investors, so that’s where I think there is an immediate reaction on this. This works on investor sentiment only,” Jain stated. “IBM is one of the leading companies in AI—if they are also struggling, then it impacts others also.”

Jain highlighted that recent AI services launches by hyperscalers and tech firms are weighing heavily on the minds of investors. “The concern is that because of AI, IT service providers will continue to struggle,” he observed.

Despite the nervous sell-off on Wall Street, Jain remains optimistic about the upcoming earnings reports for the Indian outsourcing pioneers. “Indian IT service provider results will be okay. The way TCS and HCLTech results are, I think Infosys and Wipro results should not be that bad,” he concluded.

Published on July 14, 2026