IBM Falls as a Coffee Chain Decides to Build Its Own Software

International Business Machines NYSE:IBM fell 3.39% in premarket after Bloomberg News reported that Starbucks NASDAQ:SBUX is developing in-house AI tools to replace software it currently purchases from IBM and Microsoft NASDAQ:MSFT, including an IBM tool that manages maintenance and a Microsoft system that tracks inventory. Microsoft shares were down 1.09% in premarket.

The internally developed replacements could roll out by end of next year pending testing results. Starbucks CTO Anand Varadarajan told workers earlier this year the company spends approximately $400 million annually on software alone, adding "there's clear opportunities to reduce the spend in software."

The move is part of a broader Starbucks turnaround effort targeting $2 billion in cost cuts. Both IBM and Microsoft have trailed the S&P 500 this year amid growing investor concern that customers are increasingly using AI to build their own software rather than buying from established vendors.