IBM (IBM, Financials), the company known for business software, consulting and mainframe computers, caught Wall Street off guard with a warning about second-quarter revenue.
The company said sales would come in below analysts' expectations. IBM shares quickly dropped more than 20% in premarket trading. The selloff spread almost immediately.
ServiceNow, Accenture and Cognizant fell sharply before the market opened. Microsoft also moved lower, while Salesforce, Adobe, Workday, HubSpot and Datadog came under pressure.
Investors appear to be asking whether IBM's warning is a company-specific issue or an early sign that businesses are becoming more careful with technology budgets.
IBM CEO Arvind Krishna said customers had shifted some spending. For now, it is unclear whether those dollars were delayed, moved to other projects or cut altogether.
That distinction matters. Software and consulting companies depend on businesses continuing to spend on cloud services, digital upgrades and new technology projects.
One warning does not confirm a wider slowdown. Still, the sharp reaction shows how nervous investors are about enterprise demand.
IBM's full earnings report should offer a clearer answer, especially if management explains where the weakness appeared and whether it expects the pressure to continue.