Shares of IBM dropped sharply this month — falling around 25% in a single session — after the company warned that second-quarter profits would come in below expectations, citing softer-than-anticipated demand in its software and infrastructure divisions.

The steep drop weighed heavily on the Dow Jones Industrial Average, even as the broader market held relatively steady on the day, buoyed by a cooler-than-expected inflation report.

IBM’s stumble stands out against a broader tech sector that has otherwise been riding high on AI-driven infrastructure spending. Semiconductor stocks, for instance, rebounded strongly the same week, with companies like Applied Materials, Lam Research, and Micron Technology posting solid gains.

The contrast highlights a growing divide in how investors are treating the AI boom: hardware and chip companies tied directly to AI infrastructure buildout are being rewarded, while established tech giants seen as slower to capitalize on the shift are facing tougher scrutiny from markets.

For investors and business-watchers, IBM’s warning is a reminder that AI enthusiasm hasn’t lifted every corner of the tech sector equally.