International Business Machines Corporation IBM is expected to report second-quarter 2026 results after the closing bell on July 22. In the quarter under review, the company is expected to have posted higher revenues in the software segment, with a strong focus on product innovations and watsonx.ai’s growing clout across various sectors.
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factors at play
The software segment includes hybrid cloud, automation, and data and transaction processing.
In the second quarter, IBM introduced two new managed services: Red Hat AI Inference and Red Hat OpenShift Virtualization Service on IBM Cloud. The new solutions are designed to support faster AI adoption while improving the security and efficiency of virtual workloads. IBM entered into a collaboration with OpenAI during the quarter. The alliance is focused on leveraging AI capabilities beyond simply improving productivity and efficiency and integrating AI directly into an organization’s cybersecurity operations. This will likely serve as a catalyst for IBM’s Lightwell project, which aims to improve security across the open source software ecosystem. IBM has committed $5 billion to this project. Such investments in innovation and strategic collaboration are likely to improve IBM’s commercial prospects in the growing field of cybersecurity and are likely to have resulted in additional revenue for the software segment.
During the quarter, IBM expanded its partnership with Lightedge to seamlessly integrate IBM Power Virtual Server (PowerVS) into its core hybrid cloud offering. This cloud-based infrastructure service will enable Lightedge to offer its customers a broader range of hybrid cloud options for evolving workloads. By integrating PowerVS support, Lightedge has been able to eliminate the complexity that organizations face when managing IBM Power environments across multiple vendors and platforms. It offers customers a single, trusted partner that can support every level of a modern hybrid cloud strategy.
IBM has strengthened its partnership with ServiceNow, Inc. through a long-term agreement designed to help companies overcome fragmented data in enterprise systems and outdated legacy technology, the two biggest barriers to AI adoption. The deal enables IBM to provide customers with an open, secure and flexible platform for large-scale AI deployment. Under the agreement, IBM will combine its advanced AI, automation and data management capabilities with ServiceNow’s AI platform to help companies deploy AI at scale. It helps companies modernize existing systems, reduce costs and complexity, and overcome the challenges of legacy infrastructure that limits flexibility and efficiency. These are likely to have led to higher segment sales.
In the second quarter, IBM introduced new AI-powered features for Wimbledon 2026 to improve the fan experience. Using its watsonx AI platform, IBM has improved the Wimbledon app and website to help fans enjoy games in a more interactive and personalized way. IBM has introduced Key Moments, an advanced feature designed to help fans better understand key moments during a tennis match. Using live and historical match data, the feature identifies key rallies, shots and turning points that influence a player’s momentum and chances of winning. Providing insights and explanations in real time makes the game easier and more exciting. The company has also updated Match Chat, an AI assistant that instantly answers fan questions using live match data, past stats and AI insights, with some answers also including photos and videos.
General expectations
The Zacks Consensus Estimate for software revenue is $8.04 billion, an improvement from $7.39 billion in the year-ago quarter.
The Zacks Consensus Estimate for the company’s total revenue is $17.59 billion. In the same quarter last year, the company generated sales of $16.98 billion. The consensus for earnings is currently $3.00 per share, indicating growth from $2.8 in the year-ago quarter.
Merit whispers
Our proven model does not allow for a clear prediction of a profit increase for IBM in the second quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the chances of an earnings beat. This is not the case here. Use our Earnings ESP filter to discover the best stocks to buy or sell before they’re reported.
IBM currently has an ESP of -0.76% with a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
International Business Machines Corporation Price and EPS Surprise
International Business Machines Corporation Price EPS Surprise | Quote from International Business Machines Corporation
Stocks to consider
Here are some companies to consider as our model shows they have the right combination of elements to see earnings growth this season:
Pinterest, Inc. PINS is expected to publish quarterly results on August 4th. The company has an ESP of +1.65% and is ranked #3 by Zacks.
The result ESP for Arista Networks, Inc. ANET is at +0.84% and has a Zacks Rank of 3. The company is expected to report quarterly earnings results on August 4.
The result ESP for Silicon Motion Technology Corporation SIMO is at +7.68% and has a Zacks Rank of 1. The company is expected to report quarterly earnings results on July 29.
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This article was originally published on Zacks Investment Research (zacks.com).
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