International Business Machines Corp

International Business Machines posted a rare stumble in the second quarter of 2026, missing Wall Street's earnings target and snapping what had been five consecutive quarters of consensus EPS beats. The technology giant reported operating diluted EPS of $2.93, falling short of the $2.97 analyst consensus by 1.35%, while revenue grew just 1.1% year over year to $17.16 billion, with management citing "revenue headwinds late in the second quarter" as the primary culprit. The softest spot was Infrastructure, where a 42% collapse in IBM Z mainframe revenue dragged the segment down 7.4% to $3.83 billion, reflecting a late-cycle trough between mainframe refresh cycles. Software offered a partial offset, rising 5.1% to $7.76 billion on the strength of Red Hat's 11% growth and a 19% surge in Data, though Consulting contributed little at just 1% constant-currency growth. Adding to investor unease, a securities fraud inquiry into the company's pipeline disclosures has heightened scrutiny of its forward commentary. IBM did raise its full-year constant-currency revenue growth outlook to 4% to 5%, while maintaining expectations for roughly $1.00 billion in year-over-year free cash flow improvement.