IBM lowers 2026 forecast after profit warning
IBM has lowered its full-year forecast and reported a weaker quarterly profit than anticipated, even after issuing a profit warning last week. The company's shares rose in after-hours trading.
Technology giant IBM has reduced its 2026 earnings forecast and delivered a quarterly profit that fell short of analyst expectations, despite issuing a rare profit warning last week. The company's stock gained approximately 4% in after-hours trading following the earnings release.
For the second quarter, IBM reported adjusted earnings per share of $2.93, missing the consensus estimate of $2.97. Revenue came in at $17.16 billion, below the expected $17.58 billion. The company's revenue saw a 1% year-over-year increase, though net income slightly decreased compared to the previous year.
IBM also lowered its full-year revenue growth forecast to a range of 4% to 5% on a constant-currency basis, down from its April projection of over 5%. However, the company reaffirmed its expectation for an increase in free cash flow of $1 billion for the year.
The company had previously issued a profit warning and released preliminary second-quarter results in mid-July. CEO Arvind Krishna cited weaker-than-expected sales of Z mainframe computers and transaction processing software, as organizations accelerated hardware purchases ahead of anticipated price increases. This warning led to a record 25% drop in IBM's stock price at the time.
IBM's high-margin software segment generated $7.76 billion in revenue, a 5% increase. Consulting revenue remained flat at $5.33 billion. Infrastructure revenue declined 7% to $3.84 billion, with Z mainframe revenue falling 42%.