Jim Cramer believes IBM sell-off still doesn't make stock a buy

CNBC's Jim Cramer says IBM's sharp stock decline is not enough to make the company an attractive investment, warning that changing corporate technology spending priorities continue to pose a major challenge.

The Mad Money host made the remarks after IBM shares fell about 25% following the company's weaker-than-expected preliminary second-quarter results.

AI spending reshapes corporate IT budgets

Cramer said businesses are increasingly directing technology budgets toward cybersecurity, hardware and AI-related computing costs, leaving less room for traditional software and other technology services.

He argued that IBM generates too much of its business from areas that are no longer top priorities for corporate customers, despite the company's growing artificial intelligence strategy.

According to IBM, revenue, earnings and software revenue growth all missed Wall Street expectations after several major customer deals failed to close during the quarter.

Long-term strengths remain

Cramer praised IBM CEO Arvind Krishna for acknowledging the disappointing results and said the company still owns several attractive long-term businesses.

He also noted that IBM's dividend yield has climbed above 3% following the stock's decline.

However, Cramer said those positives are outweighed by concerns that shifting IT budgets could continue to pressure the company.

Cramer remains cautious

Looking ahead, Cramer said companies are already planning their technology budgets for 2027, and he expects spending on AI infrastructure, cybersecurity and hardware to remain dominant.

While he hopes IBM's delayed customer deals eventually close rather than being cancelled, he said uncertainty around future demand prevents him from recommending the stock at current levels.