SUMMARYIBM warned that its second-quarter revenue and earnings would fall short of analyst expectations, sending its shares lower. The company said customers shifted spending toward AI hardware instead of software services, and CEO Arvind Krishna said IBM failed to adapt quickly enough as large deals closed later than expected. Preliminary fiscal 2026 Q2 figures were $17.2 billion in revenue and $2.93 in non-GAAP diluted EPS, both below FactSet estimates.
IBM shares plunged after the company warned that Q2 revenue and earnings would miss expectations, blaming customers' sudden shift in spending toward AI hardware instead of software services. However, CEO Arvind Krishna did not place all the blame on IBM's customers. The CEO also said it "faltered" by failing to "anticipate the magnitude of the capex reprioritization."
"These conditions require our teams to execute perfectly, and this quarter we faltered. We did not adapt and move quickly enough, and numerous large deals failed to close on the timelines we expected, driving the majority of our shortfall." Fast Company reports: In the preliminary report, IBM said that for its second quarter of fiscal 2026, it expects revenue of $17.2 billion, which is up 1%. It also said it expects a Non-GAAP Diluted Earnings Per Share (EPS) of $2.93, up 5%. However, as noted by CNBC, these preliminary results are below what analysts were expecting, which was $17.86 billion in revenue, and an EPS of $3.01, according to FactSet data.