IBM CEO Arvind Krishna attends a Rose Garden Club event in the White House Rose Garden on July 6, 2026 in Washington.
Mandel Gunn | AFP | Getty Images
IBM Despite issuing an earnings warning last week, the company lowered its 2026 forecast and on Wednesday announced weaker earnings than analysts expected. IBM said it aims to increase its full-year pretax profit margin by about 1 percentage point through productivity improvements.
The company’s performance against LSEG Consensus is as follows:
Earnings per share: Adjusted $2.93 vs. $2.97 expected Revenue: $17.16 billion vs. $17.58 billion expected
IBM’s revenue for the quarter increased 1% from the same period last year, the statement said. Net income was $2.17 billion, or $2.30 per share, down from $2.19 billion, or $2.36 per share, in the same period last year. Adjusted earnings do not include acquisition-related adjustments.
Management has called for revenue growth of 4% to 5% excluding currency effects in 2026. In April, IBM was targeting growth of more than 5%, excluding currency effects. The company reiterated its outlook for free cash flow to increase by $1 billion this year.
Analysts lowered their forecasts after IBM released preliminary results for the second quarter. In a letter to investors, CEO Arvind Krishna cited lower-than-planned sales of Z mainframe computers and transaction processing software as organizations rushed to buy hardware ahead of expected price increases. Stocks fell 25%, the biggest single-day drop on record.
IBM’s revenue and adjusted earnings per share numbers released Wednesday were in line with numbers released a week ago.
As of Wednesday’s close, IBM stock was down 30% so far in 2026, while the S&P 500 index was up about 10%.
IBM said its high-margin software division’s second-quarter sales rose 5% to $7.76 billion. Consulting revenue was flat at $5.33 billion. Infrastructure revenue was $3.84 billion, down 7%, and Z mainframe revenue was down 42%.
During the quarter, IBM announced that it had signed a letter of intent to build a quantum chip foundry in the United States. It also introduced the Bob artificial intelligence coding tool, which relies on a mixture of generative models, and has been adopted by more than 80,000 employees.
“IBM is expanding its AI-powered software development to increase the effectiveness of sales and marketing organizations and accelerate productivity by optimizing supply chains,” the company said in a statement Wednesday. “These initiatives will help strengthen margins and free cash flow and enhance the company’s ability to capture significant growth opportunities.”
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