IBM lowers full-year forecast after earnings warning

IBM lowered its 2026 constant-currency revenue growth forecast to 4%–5% and posted ibm earnings that still missed Wall Street targets after last week’s warning. Adjusted EPS was $2.93 versus $2.97 expected, while revenue came in at $17.16 billion against a $17.58 billion consensus, according to CNBC reporting on the formal second-quarter release. Read the full breakdown via CNBC.

Key Takeaways

• IBM cut its full-year constant-currency growth outlook to 4%–5%, down from above 5% in April.
• Q2 adjusted EPS of $2.93 and revenue of $17.16 billion trailed reduced consensus estimates.
• Infrastructure fell 7%, with Z mainframe revenue plunging 42% after a pre-buy rush ahead of expected price hikes.
• Shares had already logged a record 25% single-day drop on the preliminary warning; they rose about 1% after hours on Wednesday.
• IBM still expects about $1 billion more free cash flow for 2026 and says it is accelerating AI-driven productivity.

What happened in IBM’s latest earnings report?

On Wednesday, IBM confirmed second-quarter results that matched the preliminary figures released a week earlier—and still came in light versus LSEG consensus. Revenue grew just 1% year over year to $17.16 billion. Net income was $2.17 billion, or $2.30 per share, down from $2.19 billion, or $2.36 per share, a year earlier.

Adjusted earnings exclude acquisition-related items. Even after analysts cut estimates following the rare mid-cycle warning, the print lagged expectations. For investors tracking net worth and wealth themes, the miss underscores how quickly blue-chip tech forecasts can reshape portfolios.

Why did IBM cut its full-year forecast?

Management now sees 4% to 5% constant-currency revenue growth for 2026. As recently as April, IBM had guided for growth of more than 5%. The company reiterated its goal of roughly $1 billion in higher free cash flow for the year.

CEO Arvind Krishna told investors the shortfall stemmed from worse-than-planned sales of Z mainframes and transaction processing software. Organizations rushed to buy hardware ahead of expected price increases, pulling demand away from the mix IBM had planned.

By segment, high-margin software rose 5% to $7.76 billion. Consulting was flat at $5.33 billion. Infrastructure revenue fell 7% to $3.84 billion, with Z mainframe sales down 42%.

How have IBM shares reacted so far?

After the preliminary warning, IBM stock dropped 25%—its sharpest single-day decline on record. As of Wednesday’s close, shares were down about 30% year to date in 2026, while the S&P 500 was up roughly 10%. Following the formal report, shares rose about 1% in extended trading.

IBM also pointed to longer-term bets: a letter of intent for a U.S. quantum chip foundry and its Bob AI coding tool, already used by more than 80,000 employees. The company said it is scaling AI across software development, sales, and the supply chain to protect margins and cash flow.

Executives were due to discuss the results on a conference call at 5 p.m. ET. For wealth-focused readers, the story is less about one quarter’s miss and more about whether IBM can stabilize growth after a historic share wipeout.