IBM lowers full-year forecast after earnings warning
IBM released its second-quarter earnings report on Wednesday, showing results that fell short of analyst expectations. The company reported adjusted earnings per share of $2.93 against an expected $2.97, with revenue coming in at $17.16 billion compared to the anticipated $17.58 billion. This follows an earnings warning issued by the company just last week.
Management has lowered the full-year growth forecast. The company now expects constant-currency revenue growth between 4% and 5% for 2026, a reduction from the previously stated guidance of over 5%. Despite these figures, IBM maintains its target for $1 billion in higher free cash flow for the year. Leadership aims to increase the full-year pre-tax margin by roughly 1 percentage point through internal productivity improvements.
The revenue results for the quarter were mixed across business segments. Software revenue rose 5% to $7.76 billion, while consulting revenue remained flat at $5.33 billion. Infrastructure revenue saw a decline of 7%, with Z mainframe sales dropping 42% as customers adjusted their purchasing patterns ahead of expected price hikes. CEO Arvind Krishna previously noted that these mainframe sales were lower than planned for the quarter.
IBM continues to focus on integrating artificial intelligence into its operations to drive efficiency. The company recently introduced an internal AI coding tool used by over 80,000 employees. Additionally, IBM is working on a U.S. quantum chip foundry project. Shares of the company rose 1% in extended trading following the report, though the stock has experienced significant downward pressure over the course of 2026.