IBM forecasts Q2 revenue of $17.2 billion and adjusted EPS of $2.93, falling short of analyst estimates of $3.01 per share.
IBM issued a warning for its Q2 2026 earnings, projecting revenue of $17.2 billion, a 1% year-over-year increase, and adjusted earnings of $2.93 per share. Analysts had expected $3.01 per share, leading to a sharp decline in shares before the market opened.
The company reported a 5% gain in software revenue, flat consulting performance, and a 7% drop in infrastructure. CEO Arvind Krishna cited a shift in client capital spending toward hardware, including servers and storage, as the primary reason for the shortfall.
Krishna acknowledged execution failures, noting that large deals did not close as expected, contributing to the earnings miss. The stock fell as much as 18% in pre-market trading.