IBM's market value plunged after CEO Arvind Krishna reported delayed Q2 software deals and a mainframe sales drop. Krishna asserts these are deferrals, not losses, with a third already closed. IBM also launched Lightwell, a $5B AI security initiative targeting enterprise vulnerabilities.
IBM CEO Arvind Krishna sought to reassure Wall Street about AI's limited impact on IBM's software, stating only 2% is replaceable. This follows disappointing Q2 results, including a 42% drop in Z mainframe revenue, amid investor skepticism over AI's disruption to software business models.
IBM reported earnings significantly below Wall Street's expectations, with its stock tanking 25% after a preliminary warning from CEO Arvind Krishna. The 115-year-old company's mainframe business saw a 42% decline, as customers diverted budgets to other hardware due to rising component costs driven by the AI boom.
IBM shares fell 6% in extended trading after the tech giant reported Q1 adjusted EPS of $1.91, beating the $1.81 consensus, with revenue of $15.92 billion exceeding expectations. The company maintained its full-year guidance despite strong quarterly performance.
IBM reported stronger-than-expected Q1 2026 results with EPS of $1.91 adjusted vs $1.81 expected and revenue of $15.92 billion vs $15.62 billion expected, but shares slipped 6% in extended trading as the company maintained its full-year guidance. Software revenue grew 11% to $7.05 billion, consulting rose 4% to $5.27 billion, and infrastructure jumped 15% to $3.33 billion, driven by a 51% surge in Z mainframe hardware revenue. IBM completed the $11 billion Confluent acquisition in mid-March and now sees operating pre-tax margin expanding by about 1%.
