Japan's technology-related equities moved lower on Wednesday after a sharp drop in IBM shares and a company warning about shifting enterprise spending patterns tied to artificial intelligence deployment.
IBM sank roughly 25% in overnight trading after telling investors that many customers are diverting budgets toward servers, storage and memory to establish AI infrastructure. The company said firms are rushing to secure hardware that faces supply constraints and, as a result, are postponing software purchases.
IBM also provided a second-quarter revenue projection of about $17.2 billion, a figure that sits below analysts' expectations and represents its weakest sales growth in more than a year.
In Tokyo, investors reacted by marking down a range of IT stocks. NEC Corp (TYO:6701) retreated about 5% and Fujitsu (TYO:6702) slipped approximately 5.5%, both underperforming the broader market as participants reassessed demand for IT services tied to corporate technology budgets. BayCurrent Consulting (TYO:6532) saw shares drop nearly 7%, while Nomura Research Institute (TYO:4307) declined around 5%.
The market reaction reflected heightened concern that the current AI spending surge - while lifting demand for chips and data-center infrastructure - could exert downward pressure on software vendors as enterprises reallocate limited technology budgets toward hardware necessary to run AI workloads.
Traders and analysts watching the sector noted the tension between accelerating purchases of supply-constrained equipment and delayed enterprise software spending. That dynamic was cited by IBM as a factor behind its weaker near-term revenue outlook.
Market context
- IBM's hardware-focused commentary and guidance drove a sharp move in its own shares and spillover losses in Japan's IT sector.
- Companies tied to IT services and corporate software in Tokyo underperformed as investors digested the possibility of budget reallocation within enterprise IT spending.
- The development underscores an uneven impact from AI investment - boosting demand for chips and data-center equipment while creating headwinds for software vendors.