IBM’s stock dropped more than 5 percent, or more than $8 per share, in premarket trade Wednesday morning. The stock closed in red territory Tuesday ahead of the much-anticipated earnings report, at slightly above $170 per share.
IBM represents the fourth highest-priced stock in the price-weighted Dow Jones industrial average. Based on its premarket loss, it would be a drag on the Dow of roughly 59 points when the benchmark opens for trading.
The New York-based information technologies company, which is in the midst of transitioning its business model away from traditional hardware toward cloud computing and artificial intelligence, reported earnings Tuesday evening that beat Street estimates, but revenue that fell short.
This marked the twentieth consecutive quarter of year-over-year revenue declines for IBM.
“The results reinforce our view that IBM’s recently poor earning quality masks ongoing secular headwinds that will likely result in disappointment for investors,” wrote Jefferies analyst James Kisner, who has an underperform rating on IBM, in a note.
Further, IBM said its profit margins dipped for the quarter across numerous business segments, including ones the company has been dependent on for future growth.
On Tuesday, the Dow closed about 110 points lower, with Goldman Sachs shaving off 73 points after the bank reported weaker-than-expected first-quarter results.
As of Tuesday’s market close, IBM has gained near 2.5 percent for the year, and the stock is up about 18 percent from one year ago.
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— CNBC’s Peter Shacknow, Anita Balakrishnan and Fred Imbert contributed to this report.