IBM (NYSE: IBM) released preliminary second-quarter 2026 financial results on July 14, disclosing revenue of $17.2 billion, up 1 percent year over year, but below internal expectations due to weakness in its Infrastructure and Software segments.

Infrastructure revenue fell 7 percent in the quarter, driven by a shortfall in mainframe Z system sales and the associated software stack, particularly in Transaction Processing. IBM Chairman and CEO Arvind Krishna attributed part of the miss to clients shifting capital spending toward servers, storage, and memory in anticipation of supply constraints and price increases late in June. Large deals also failed to close on expected timelines.

Software revenue rose 5 percent, while Consulting revenue was flat on a reported basis, up 1 percent at constant currency.

On a GAAP basis, diluted earnings per share came in at $2.27, down 2 percent. On a non-GAAP operating basis, EPS was $2.93, up 5 percent. GAAP gross profit margin was 57.7 percent, down 100 basis points. Year-to-date free cash flow was $4.8 billion.

Areas of relative strength included Red Hat revenue growth of 11 percent, Distributed Infrastructure revenue up 37 percent, and continued growth in consulting signings tied to generative AI. IBM's z17 mainframe program remained at approximately 130 percent of its predecessor program on a cumulative basis.

IBM also announced Lightwell, described as a $5 billion commitment backed by more than 20,000 engineers aimed at addressing open source software vulnerabilities, with general availability beginning July 8. Early adopters cited include Bank of America, Goldman Sachs, JPMorganChase, and Visa, among others.

On quantum computing, IBM announced a letter of intent with the U.S. Department of Commerce to build a quantum wafer foundry called Anderon, supported by $1 billion in CHIPS Act incentives and a $1 billion IBM cash contribution. IBM also disclosed plans to invest more than $10 billion in quantum over the next five years.

IBM said final second-quarter results could differ slightly from the preliminary figures and scheduled a full earnings conference call for July 22, 2026.