IBM cuts revenue growth outlook to 4-5% after mainframe slump

IBM lowered its full-year revenue growth forecast on Wednesday, July 22, 2026, following a sharp decline in its mainframe hardware business during the second quarter. The technology giant now expects revenue to grow 4% to 5% this year, a reduction from its previous guidance of over 5% growth.

The revision came as the company reported second-quarter revenue of $17.16 billion, a modest 1% year-over-year increase that fell short of analyst expectations. Adjusted earnings per share were $2.93, also missing Wall Street forecasts. A primary driver of the shortfall was a 42% collapse in sales of its Z system mainframes during the quarter ended June 30, which led to a 7% overall decline in infrastructure revenue.

Chief Executive Officer Arvind Krishna attributed the disappointing results to execution challenges, specifically pointing to delayed capital expenditure deals with large enterprise clients. He emphasized that the underlying demand remains intact but has been postponed, noting that approximately one-third of the pending transactions had already closed in the current third quarter. Chief Financial Officer Jim Kavanaugh added that the mainframe decline was more severe than...