An earnings warning from IBM before the market opened on Tuesday has triggered widespread concerns about the outlook for corporate technology spending, dragging down the software sector.

Shares of companies including Microsoft, ServiceNow, and Salesforce fell between 3% and 7% in pre-market trading.

IBM anticipates second-quarter revenue of approximately $17.2 billion and adjusted earnings per share of about $2.93, both figures falling short of analyst expectations.

CEO Arvind Krishna explained that in the final weeks of June, clients shifted a significant portion of their quarterly capital expenditures towards purchasing servers, storage, and memory to secure supply ahead of anticipated price increases, which reduced spending on IBM's software products.

He acknowledged that the company failed to anticipate and adapt to this shift in time.

This warning is seen as another sign of enterprise IT spending moving away from software and towards artificial intelligence infrastructure.

As a result, exchange-traded funds tracking the software industry broadly declined, and the market adopted a more cautious stance towards upcoming earnings reports from major tech firms.

Shares of IBM plummeted more than 20% on the day, marking their largest single-day decline in decades, and weighed on the performance of the Dow Jones Industrial Average.