IBM just handed Wall Street an uncomfortable reality check. The company’s preliminary Q2 2026 results, released July 14, showed revenue of $17.2 billion, up just 1% year-over-year, with adjusted earnings per share coming in at $2.93 against a consensus estimate of roughly $3.01.
IBM shares fell as much as 25% following a shareholder letter from CEO Arvind Krishna, marking one of the company’s worst single-day performances in decades.
What actually happened here
Instead of signing high-margin software and consulting contracts, corporate buyers are front-loading purchases of AI hardware, servers, and storage systems. The working theory is that supply constraints are coming, and companies want to lock in capacity before prices climb further.
IBM’s infrastructure segment revenue fell 7% year-over-year. Software revenue did grow 5%, but not nearly enough to cover the gap left by the pivot away from services.
