International Business Machines is scheduled to report its second-quarter financial results after the bell Wednesday. Here's what you need to know.

THE CONTEXT

Big Blue has already previewed some of its second-quarter results, and they weren't pretty.

The company said last week that it plans to report a weaker-than-expected quarter for its software and infrastructure businesses, as customers rotated their spending toward servers, storage and memory. The preannouncement triggered IBM's largest single-day stock drop on record.

IBM Chief Executive Arvind Krishna took the responsibility for the company's lackluster showing in a letter to investors. "These conditions require our teams to execute perfectly, and this quarter we faltered," he wrote.

The announcement still left analysts asking whether the capital reallocation that bruised IBM during the second quarter is a temporary blip or a longer-term challenge.

"If this issue - memory inflation causing a reprioritization of enterprise compute/storage spend - were isolated to 2Q, we could look at today's stock move and theorize the negative risk event has passed," Morgan Stanley analysts wrote in a note following the preannouncement.

But businesses increasingly see the underlying memory price inflation as a structural, multi-year headwind, they added, "which means this same type of capex reprioritization could theoretically happen in 2H26, and into CY27, as well."

The answers may not be immediately obvious, Stifel analysts wrote in a note. IBM is currently in a seasonally weak third quarter, meaning that investors may face a "data void" until the company reports fourth-quarter results in January.

As of last week, it wasn't clear exactly how much guidance IBM will issue in its official report, The Wall Street Journal reported, citing people familiar with the matter. In the meantime, IBM's announcement has triggered speculation on Wall Street about a break-up of the company or the involvement of an activist investor.

Shares in IBM have fallen 29% this year, and were recently down 1% at $210.88.

THE NUMBERS

IBM said it expects to report adjusted earnings of $2.93 a share, up 5% year-over-year.

The company expects revenue of $17.2 billion, compared with $17 billion a year earlier.

Revenue in the infrastructure segment is expected to fall 7%. Software revenue is expected to rise 5%, while consulting revenue will stay flat, IBM said.

Write to Elias Schisgall at elias.schisgall@wsj.com

(END) Dow Jones Newswires

July 21, 2026 14:07 ET (18:07 GMT)

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