IBM Q1 Earnings Beat Forecasts, Shares Drop 7%

International Business Machines Corporation reported first-quarter earnings for 2026 on Wednesday that exceeded analyst expectations on revenue and profit, yet its shares fell about 7 percent in after-hours trading as the company held its full-year forecast steady without an upward revision.

The tech company posted adjusted earnings per share of $1.91, surpassing the $1.81 consensus estimate from analysts. Revenue reached $15.92 billion, topping forecasts of $15.62 billion and marking a 9 percent increase from the year-earlier period, or 6 percent at constant currency. Net income rose to $1.22 billion, or $1.28 per diluted share, compared with $1.06 billion, or $1.12 per share, in the prior quarter. Free cash flow improved to $2.22 billion, up $300 million year over year, while the gross profit margin expanded to 57.7 percent, a gain of 110 basis points.

Performance across segments underscored IBM's emphasis on software and infrastructure amid rising demand for artificial intelligence and hybrid cloud solutions. The software division generated $7.05 billion in revenue, an 11 percent rise that slightly beat projections. This growth was led by Red Hat, the enterprise platform...