The company’s performance highlights a clear divergence between its high-growth software portfolio and its traditional infrastructure business. Software revenue climbed 5% to $7.8 billion, bolstered by strong gains in data solutions and the Red Hat hybrid cloud business. Conversely, the infrastructure segment faced a 7% decline, largely driven by a 42% drop in IBM Z sales, though the firm noted a $500 million order backlog for its Power and Storage offerings.
IBM Adjusts Revenue Outlook Amid Second-Quarter Earnings
IBM reported second-quarter 2026 revenue of $17.2 billion, a 1% increase year-over-year, as the company navigates a shifting enterprise landscape. CEO Arvind Krishna underscored a strategic pivot toward AI-driven software and infrastructure, while the firm updated its full-year expectations to reflect a constant currency revenue growth target of four-to-five percent.
To capture momentum in enterprise-scale AI deployment, IBM is accelerating its go-to-market strategy by expanding sales coverage and investing in specialized technical talent. The company also continues its aggressive push into quantum computing, including a $10 billion investment plan over the next five years and the development of the Anderon quantum wafer foundry. Despite revenue headwinds late in the quarter, CFO James Kavanaugh emphasized that the company maintains financial discipline, focusing on productivity initiatives and consistent cash flow generation to support shareholder dividends.
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