Every new data center, every chip order and every infrastructure buildout was supposed to create a ripple effect that benefited the entire technology ecosystem.

But what if the opposite is starting to happen? One unexpected event this morning may have revealed the first real crack in that narrative, raising uncomfortable questions about whether AI's massive capital spending boom is beginning to cannibalize the very companies investors expected it to enrich.

The questions raised this morning could wind up being contagious and spreading to other AI names…at a time when the market is already arguably the most overvalued its ever been in history.

IBM delivered an unexpected dose of bad news this morning, releasing preliminary second quarter results well ahead of its scheduled July 22 earnings call, and investors responded by immediately taking the stock out behind the woodshed. During the time of this writing, the stock had moved from -17% to -20%.

Shares fell sharply in premarket trading after the company disclosed preliminary revenue of approximately $17.2 billion, well below the roughly $17.9 billion analysts had been expecting. The shortfall was concentrated in two of IBM's most important businesses: software and infrastructure.

The infrastructure miss was particularly striking. CEO Arvind Krishna said customers unexpectedly redirected their late quarter capital spending toward servers, storage and memory in an effort to secure supply constrained equipment before anticipated price increases.

"In the last few weeks of June, we saw clients shift their quarterly capex spend toward servers, storage, and memory purchases to secure supply constrained infrastructure ahead of expected price increases," Krishna wrote in a letter to shareholders.

That reprioritization left customers with less money, and apparently less management attention, available for IBM's z17 mainframes and the transaction processing software attached to them. Krishna said IBM had anticipated some supply chain disruption but "did not anticipate the magnitude of the capex reprioritization."

Clients were also distracted by what he described as "rapidly evolving, industry wide cybersecurity concerns." [Note that the iShares Cybersecurity and Tech ETF (IHAK) has for years been a favorite of mine and was in my March 2026 "Bear Market Shopping List"].