IBM misses Q2 estimates, lowers full-year revenue growth outlook as clients shift spending to AI

IBM just had the kind of quarter that makes investor relations teams earn their paychecks. The company reported Q2 2026 revenue of $17.2 billion, missing Wall Street’s consensus estimate of roughly $17.86 billion by a wide margin. Adjusted earnings per share came in at $2.93, also below the anticipated $3.01 to $3.02 range. The market’s reaction was about as gentle as a sledgehammer. IBM’s stock cratered 25% on July 14, marking the company’s steepest single-day decline on record. The numbers behind the pain When IBM released its complete earnings on July 22, the picture didn’t get much prettier. The company slashed its full-year 2026 revenue growth forecast to just 4-5%, a notable reduction from prior guidance. The sector breakdown tells a familiar story of tech in transition. Infrastructure revenue declined 7%, while software revenue managed only modest growth. The culprit, according to the company, is a client spending shift. Enterprise customers are redirecting their budgets toward AI-related hardware and cloud solutions, leaving traditional software and infrastructure revenues under pressure. CEO Arvind Krishna used the earnings call to reaffirm IBM’s strategic focus on AI and ...