Morning Roundup: IBM's Worst Day, Stripe Sets Its Sights on PayPal, and an OpenAI Gadget

IBM shares plummeted 25% following the release of weak preliminary quarterly results—the biggest drop in nearly 60 years. Stripe, in partnership with Advent International, has offered to buy PayPal for more than $53 billion. Read about these and other topics in our roundup of key events as of the morning of July 15.

Oil prices are rising amid new U.S. strikes against Iran and Washington’s resumption of a naval blockade of Iranian ports in the Strait of Hormuz, according to CNBC. WTI futures for August delivery are up 0.5% to $79.7 per barrel, while Brent futures for September delivery have risen 0.8% to $85.4 per barrel.

According to the U.S. Central Command (CENTCOM), U.S. forces carried out strikes on dozens of Iranian military targets, including missile and drone systems. Analysts note that the resumption of hostilities reduces the likelihood of a swift resumption of shipping in the Strait of Hormuz, and if the conflict continues at its current intensity, oil prices could once again test the $100-per-barrel mark.

IBM shares plummeted 25%—marking the company’s biggest one-day drop since at least 1968, according to Bloomberg. Preliminary second-quarter revenue came in at $17.2 billion, compared with analysts’ expectations of $17.9 billion, while sales in the infrastructure division, including mainframes, fell by 7%.

The company attributed the weak results to customers reallocating their budgets toward servers, chips, and data storage systems amid a shortage of AI hardware. CEO Arvind Krishna acknowledged that IBM had underestimated the scale of this shift, which resulted in some major deals not closing on schedule.

Investors reacted sharply to the warning that there isn’t enough money to go around. Shares of other software developers, including Workday and ServiceNow, also fell. Business Insider is already suggesting we call this the “Mainframe-alypse”—by analogy with the term “SaaSpocalypse,” which emerged after the sell-off of software stocks earlier this year.

Payment company Stripe and investment firm Advent International have offered to acquire PayPal for $60.50 per share, valuing the company at more than $53 billion, Reuters reported, citing sources familiar with the negotiations. The offer represents a premium of about 28% over PayPal’s current market price, and financing for the deal, totaling about $50 billion, has already been secured from banks.

According to sources who spoke with Reuters, Stripe and Advent intend to own PayPal on a parity basis and do not plan to split up the company. PayPal has not yet responded to the proposal. The company’s market capitalization has fallen from a peak of about $360 billion in 2021 to a low of approximately $36 billion this year amid slowing business growth and intensifying competition.

OpenAI is developing a portable, screenless home device in the form of a smart speaker that will serve as a “computer for the AI era,” Bloomberg has learned. It will be able to control smart home devices, play music, answer questions, and utilize ChatGPT’s capabilities. The device will run on the advanced GPT-Live voice model, feature a camera, sensors, and a battery, and over time will be able to better understand its owner, anticipate their needs, and become a personal AI companion.

The project will be OpenAI’s first device following its $6.5 billion acquisition of Jony Ive’s startup, io Products. The company plans to unveil the new product this year and launch it in 2027, though the timeline could change due to a lawsuit filed by Apple, which accuses OpenAI of using trade secrets in the development of its devices, the agency notes.

Shares of South Korea’s SK Hynix jumped 13%, leading gains in the Asian technology sector following a rebound among U.S. semiconductor manufacturers, according to CNBC. Samsung Electronics shares rose 7.6%, Seoul Semiconductor rose 6.4%, Japan’s Advantest rose 4.7%, Lasertec rose 9.5%, Disco rose 2.3%, Tokyo Electron rose 3%, and TSMC gained 1%.

At the same time, analysts believe that the AI market is becoming overheated. According to them, companies continue to actively purchase chips and server equipment to advance AI, which means manufacturers are reaping the bulk of the benefits, while the market is already experiencing shortages of certain components.

— Japan's broad-based Topix index rose 0.9%, while the Nikkei 225 rose 1.2%.

— Hong Kong's Hang Seng Index rose 1.3%, while mainland China's CSI 300 Index rose 0.2%.

— In South Korea, the KOSPI index rose 6.3%, and the KOSDAQ index rose 4.7%.

— Australia's S&P/ASX 200 rose 0.3%.

— S&P 500 futures rose 0.2%, Nasdaq Composite futures rose 0.7%, and Dow Jones Industrial Average futures rose 0.1%.

This article was AI-translated and verified by a human editor