Shares in International Business Machines (IBM) plummeted as much as 25% on Tuesday after the company posted lower earnings than expected on Monday. The dip marked the tech giant’s worst drop in decades, with the stock down to nearly $210 from the $280 price level.

The company reported preliminary Q2 results with revenues of $17.2 billion, falling short of expectations. The earnings report led to significant analyst downgrades and concerns over its strategic direction in AI infrastructure. Still, the stock has an overall buy rating on Wall Street, although Tuesday’s dip is a flag for concern.

“This quarter we faltered,” CEO Arvind Krishna wrote in a letter to investors (3), acknowledging the company “did not adapt and move quickly enough” as customers redirected technology budgets toward AI servers, storage and memory. Krishna added that IBM expected some disruption from supply-chain constraints, but underestimated how dramatically customers would shift their spending.

In addition to the earnings miss, IBM also shared lower-than-expected forecasts for next quarter and the remaining fiscal year. IBM sees second-quarter sales of $17.2 billion versus analyst estimates of $17.85 billion. Non-GAAP earnings are expected to be $2.93 compared to estimates of $3.02. “When we discussed our expectations with you in April, we noted that we would be wrapping up the launch of z17 in the second quarter,” the IBM CEO said. “Given this was the strongest start to a mainframe program in our history, we expected Infrastructure revenue to decline low-single digits for the year, beginning this quarter.

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On The Street, the average price target for IBM stock remains at $303.83, with a high forecast of $375.00 and a low forecast of $191.00. The average price target represents a 39.37% increase from the stock’s current price; however, that is lower than last week’s forecasts. HSBC and Morgan Stanley assigned sell and hold ratings, respectively, for IBM stock on Tuesday. Both firms possess five-star analysts on their rosters; therefore, the IBM earnings miss could weigh heavily on investors’ minds over the next month.