IBM's official earnings report comes after a bruising profit warning last week

IBM shares have lost about 30% so far this year.

First International Business Machines warned last week that its quarterly revenue had come up short as customers drained their budgets on artificial-intelligence hardware, leaving less room to invest in software. Now the company is cutting its outlook for the full year.

IBM $(IBM)$ said on Wednesday that it expects constant-currency revenue growth in the range of 4% to 5% for 2026, below a prior forecast that called for growth of over 5%.

The company maintained its expectations for annual free cash flow to increase by about $1 billion relative to what was seen in 2025.

Investors perhaps feared a worse update to the outlook, and IBM shares are up 3% in the extended session following the latest update. Evercore analyst Amit Daryanani wrote in a note prior to the release that he expected guidance to be revised lower to a "low/mid single digit range."

"Although we faced revenue headwinds late in the second quarter, we continued to focus on the fundamentals of our business, including driving productivity, strengthening our portfolio, and generating free cash flow," CFO James Kavanaugh said in a release.

"In a quarter like this, it is critical that our financial and operational discipline remains strong and that we continue to invest for growth while returning value to shareholders through our dividend."

The company spent $1.6 billion on its dividend in the second quarter.

The outlook adjustment is the latest blow for a technology heavyweight that is trying to transition its business for the AI era. When delivering its profit warning last week, IBM pointed to recent challenges in its mainframe business.

IBM shares fell 25% in a single day last week after that warning, in what marked their largest one-day decline on record.

IBM's official earnings report from Wednesday afternoon showed second-quarter revenue of $17.2 billion, up 1% from a year before but below the $17.48 billion that analysts had been expecting prior to last week's preliminary release. The company also reported $2.93 in adjusted earnings per share, up 5% from a year prior but below the $2.95 that analysts had been modeling before last week's release.

Shares of IBM have lost about 30% on a year-to-date basis.

See also: SpaceX slides further down the ranks of large companies as it's overtaken by Meta

-Hannah Pedone

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

July 22, 2026 16:37 ET (20:37 GMT)

Copyright (c) 2026 Dow Jones & Company, Inc.