IBM preliminary Q2 earnings disappoint, shares slide
By Michele Maatouk
Date: Tuesday 14 Jul 2026
(Sharecast News) - IBM shares tumbled on Tuesday after the tech firm's preliminary second-quarter earnings fell short of expectations amid weakness in the software and infrastructure segments.
IBM said adjusted earnings were set to come in at $2.93 per share, up 5%, on revenue of $17.2bn, up 1%. This was below analysts' expectations of $3.01 and $17.86bm, respectively.
Software revenue declined 5%, it said, while consulting revenue was flat and revenue from infrastructure was down 7%.
Chairman, president and chief executive Arvind Krishna conceded that the results were "disappointing" and that the company did not adapt quickly enough to changing market conditions.
"When we discussed our expectations with you in April, we noted that we would be wrapping on the launch of z17 in the second quarter," he said. "Given this was the strongest start to a mainframe program in our history, we expected Infrastructure revenue to decline low-single digits for the year, beginning this quarter. What played out was worse than our expectations, driven by a shortfall in our Z performance and the associated software stack, primarily in Transaction Processing.
"In the last few weeks of June, we saw clients shift their quarterly capex spend toward servers, storage, and memory purchases to secure supply-constrained infrastructure ahead of expected price increases. This dynamic impacted client buying patterns."
Krishna said that while IBM had expected some supply chain related impact, it did not anticipate the magnitude of the capex reprioritisation. "In addition, clients were distracted with rapidly-evolving, industry-wide cybersecurity concerns in the quarter," he said.
"These conditions require our teams to execute perfectly, and this quarter we faltered. We did not adapt and move quickly enough, and numerous large deals failed to close on the timelines we expected, driving the majority of our shortfall.
"These are not excuses, but they are realities. Our job is to help our clients through uncertainty, to find paths forward to grow their businesses no matter what is happening in the external environment."
At 1255 BST, the shares were down 23.2% at $223 in pre-market trade.
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