IBM Plunges 7.74% as Government Cuts Hit Contracts

On April 24, 2025, IBM's stock experienced a significant drop of 7.74% in pre-market trading, reflecting a challenging period for the tech giant.

IBM's recent financial performance has been impacted by the 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 prospects, particularly in light of the broader economic uncertainties exacerbated by trade policies.

Despite reporting a 1% increase in revenue for the first quarter of 2025, reaching $145 billion, IBM's consulting revenue declined by 2%. The company's decision to provide a second-quarter revenue forecast, projecting earnings between $164 billion and $167.5 billion, was an attempt to reassure investors. However, the suspension of government contracts has overshadowed these positive developments, contributing to the stock's decline.

IBM's Chief Financial Officer, James Kavanaugh, acknowledged the impact of the government's cost-cutting measures but emphasized that the affected contracts represent less than 1% of the company's total consulting orders. Nevertheless, analysts have expressed concerns about the broader economic uncertainties and the potential for further disruptions in government spending.