Earnings
Home›Earnings›Previews›IBM faces key software and guidance questions ahead of…
IBM faces key software and guidance questions ahead of Q2 earnings
IBM shares have fallen about 26% over the past five days and 28% year to date after preliminary Q2 results, with investors focused on software growth and execution.
IBM is set to report its second-quarter earnings on July 22 after a preliminary results update helped trigger a sharp selloff, with the stock down roughly 26% over the past five days and 28% year to date, according to Yahoo Finance.
Ahead of the print, investors are weighing three factors that could determine whether the move is justified, particularly IBM’s software performance. IBM reported preliminary Q2 software revenue rose 5% year over year, a smaller increase than the 11% growth in Q1, as well as 10% and 14% in the third and fourth quarters of 2025.
The concern for markets is that software growth has visibly slowed, and the preliminary quarter also fell short of both Wall Street and management expectations, even as IBM continues to pivot toward software and services including hybrid cloud, automation, cybersecurity, AI enterprise solutions and Red Hat.
In its commentary alongside the preliminary update, management said the slowdown was not driven by weaker customer demand. Instead, it pointed to execution issues, saying some enterprise clients redirected technology budgets toward AI infrastructure in late June as equipment and infrastructure are becoming scarce ahead of anticipated price increases.