IBM warns software spending shift to infrastructure; Cramer backs Intel foundry over Arm licensees

IBM preannounced a weaker-than-expected quarter on Tuesday, citing a critical shift in enterprise spending priorities: customers are pulling budgets away from software and redirecting capital toward servers, storage, and memory — the physical infrastructure that runs AI workloads. The warning sent IBM shares down roughly 26%, the worst single-day performance since October 1987. On the same day, Jim Cramer cited IBM's guidance miss as validation of a broader infrastructure-first trend and declared his support for Intel over Arm Holdings despite both stocks facing headwinds.

Cramer told viewers that while Arm CEO Rene Haas is capable, Arm's dependence on third-party foundries for manufacturing creates a structural disadvantage. Intel, by contrast, is building its own foundry capacity and has optionality to serve AI inference at scale. HSBC had downgraded Arm shares to hold due to foundry capacity constraints, and Cramer saw that as a reason to exit the Club's Arm position and buy more Intel. Arm fell 5% on the downgrade; Intel remains Cramer's preferred leverage to the AI infrastructure buildout.

This marks a significant pivot in how Wall Street is thinking about the hardware stack. Software vendors are feeling the pain of that repricing in real time.