IBM's preliminary Q2 revenue misses estimates as mainframe sales slump

IBM disclosed preliminary second-quarter revenue of $17.2 billion on July 14, 2026, up 1% from a year earlier but short of the roughly $17.9 billion Wall Street expected. Its shares fell sharply on the warning.

The miss came mainly from its Infrastructure unit, where sales dropped 7% as mainframe (the Z line) hardware and related software weakened. Chief Executive Arvind Krishna said in a letter to investors that customers pulled capital spending toward servers, storage and memory ahead of anticipated, supply-constrained price increases, buying the components expected to get pricier first and deferring big mainframe purchases.

The pain was concentrated. Software revenue rose 5% and consulting was roughly flat at constant currency, so the hardware slump alone pulled the top line below estimates. Operating (non-GAAP) earnings actually rose to $2.93 a share, even as reported GAAP earnings slipped to $2.27.

Investors focused on the revenue line. IBM shares fell as much as roughly 20% intraday as the preliminary numbers landed, an unusually harsh reaction for a company that has marketed itself as a steady AI-and-mainframe cash generator.

The figures are preliminary, and IBM holds its full second-quarter earnings call on July 22, 2026, where Krishna will face questions on whether the capex shift is a timing blip or a durable pullback from its most profitable hardware line. If mainframe demand snaps back once the price increases hit, the quarter reads as a deferral; if it does not, the miss points to a softer core.