IBM Stock Plunges 7.89% as Government Contracts Suspended

On April 24, 2025, IBM's stock experienced a significant drop of 7.89% in pre-market trading, reflecting a challenging period for the tech giant.

IBM's recent financial performance has been impacted by the U.S. government's cost-cutting measures, which have led to the suspension of 15 government contracts worth approximately $100 million. This development has raised concerns among investors about the company's future revenue streams, particularly in its consulting division, where federal government contracts account for nearly 10% of the business.

Despite reporting better-than-expected earnings for the first quarter of 2025, IBM's stock price plummeted. The company's revenue grew by 1% to $14.5 billion, but consulting revenue declined by 2% to $5.1 billion. The suspension of government contracts has added to the uncertainty, as the global economic outlook remains clouded by trade tensions and policy changes.

IBM's management has acknowledged the challenges but remains optimistic about the company's long-term prospects. The company has broken its tradition of not providing quarterly guidance and has offered a positive outlook for the second quarter, projecting revenue between $16.4 billion and $16.75 billion. However, the market's reaction suggests that investors are more focused on the immediate risks posed by the government contract suspensions and the broader economic uncertainties.