IBM Shares Drop More Than 5% After The Trump Administration's DOGE Cuts Off 15 Federal Contracts

IBM is calling Hail Mary, after the Trump Administration cut off 15 U.S federal contracts with the company, causing the company's stock to crash more than 5% just hours after the news was first revealed.

The contracts, which were estimated to worth close to $100 million dollars, were all either cancelled or paused by the Department of Government Efficiency as part of its cost-cutting drive.

While the affected contracts only represent less than 1% of the company's consulting backlog, but the move still injects a fresh wave of uncertainty for the tech giant at a time when the economic outlook seems dim by the currents of the economic war between China and U.S.

But IBM is not the only tech company that was hit by the government cuts; rivals Acccenture and Deloitte have also seen setbacks from the belt-tightening efforts by the Trump Administration and its Department of Government Efficiency.

To regain its investor's trust, IBM has broken its long-standing practice of not issuing its quarterly forecast. It also reported that it broke Wall Street expectations on both revenue and profit.

"We've chosen now, in light of the very unprecedented dynamic of uncertainty going on in the market, to give a second-quarter revenue guidance range. We felt incumbent upon ourselves to give as much transparency as possible to our investor group."

IMB shares have gained 12% so far this year, outperforming the benchmark S&P 500 index, which has declined nearly 9%. The company forecasts June-quarter revenue between $16.40 billion and $16.75 billion, above analysts average estimate of $16.33 billion.

In the first quarter, its revenue rose 1% to $14.5 billion. Consulting revenue fell 2% to $5.1 billion, roughly in line with estimates.