IBM lowered its 2026 revenue growth forecast to between 4% and 5% in constant currency, down from its previous projection of more than 5%, after reporting second-quarter sales of $17.2 billion, roughly in line with estimates but weighed down by a 42% decline in Z mainframe revenue.
Net income slipped 1% year-over-year to $2.17 billion, while adjusted earnings per share of $2.93 matched earlier guidance. The results followed a July 14 preannouncement that triggered the worst single-day stock decline in IBM's history. Software segment revenue grew 5% to $7.8 billion, slowing from 11% growth in the first quarter. The company also faces a securities-fraud inquiry into whether it overstated its sales pipeline before the preannouncement.
IBM signed a letter of intent to build a U.S. quantum chip foundry and expects to demonstrate the first example of quantum advantage this year.