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• Q2 revenue of $17.16 billion missed estimates as infrastructure sales fell 7%, while software grew 5%.
• IBM trimmed its 2026 constant-currency revenue growth outlook to 4%-5%, down from its previous forecast of more than 5%.
• Management said delays in closing dozens of large infrastructure deals drove most of the revenue shortfall rather than weaker customer demand.

International Business Machines Corp. (IBM) lowered its 2026 sales outlook on Wednesday after reporting second-quarter revenue that missed Wall Street estimates, weighed down by weaker infrastructure sales. The company also said it aims to widen its full-year pre-tax margin by about one percentage point through higher productivity.

IBM shares fluctuated in after-hours trading, initially rising by around 3% before edging lower. At the time of writing, IBM stock was down about 0.13% after ending the regular session 2.25% lower.

IBM Q2 Revenue Misses Estimates

IBM reported second-quarter revenue of $17.16 billion, up 1% year-over-year but below the $17.26 billion consensus estimate, according to Fiscal.ai. The results reflected a 7% year-over-year decline in infrastructure revenue, flat consulting sales and 5% growth in software revenue.

Adjusted earnings came in at $2.93 per share, matching analysts’ expectations, according to Fiscal.ai.

Net income declined to $2.17 billion, or $2.30 per share, from $2.19 billion, or $2.36 per share, a year earlier.

Investors had already received an early look at the quarter after IBM previewed its second-quarter earnings last week, marking only the second earnings pre-announcement in the company’s history following the 2008 financial crisis, according to Barron’s.

IBM Cuts 2026 Sales Outlook

IBM trimmed its full-year 2026 revenue outlook, forecasting constant-currency growth of 4% to 5%, down from its earlier expectation of more than 5%. The company said it continues to expect free cash flow to increase by about $1 billion year over year for the full year.

Arvind Krishna, IBM chairman, president and chief executive officer, said, “We fundamentally believe that we are in the early innings of a structural shift for business, and that our portfolio — across software, infrastructure and consulting — is well-positioned to help our clients tap the value, and manage the challenges, of an AI-driven future.”

During the Q2 earnings conference call, IBM said delayed closures of “tens of large deals” accounted for most of the infrastructure revenue shortfall. The company added that about 80% of its annual software revenue is recurring and sees no evidence of customers moving away from its mainframe business. It added, "AI is driving incremental capacity growth and new workloads as clients look to run AI closer to their most sensitive data."

IBM Stock: What Stocktwits Retail Sentiment Says

Retail sentiment on Stocktwits for IBM was ‘bullish,’ unchanged in the past 24 hours, while message volume was ‘high.’

As of Wednesday’s close, IBM shares have declined around 32% year-to-date.

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