NEW YORK, April 23, 2026, 14:00 EDT
IBM shares slid 9.6% to $227.72 by 1:46 p.m. EDT on Thursday. The company outpaced first-quarter estimates but reported weaker software growth and stuck with its full-year outlook.
IBM’s shift didn’t stay contained. Traders have been watching IBM and ServiceNow earnings to gauge if AI investment is helping legacy enterprise-software names or starting to bite into their core markets. On Thursday, Microsoft and Adobe slid along with them—despite chip stocks moving higher.
IBM turned in revenue of $15.92 billion, a 9% jump, with adjusted EPS hitting $1.91—both topping LSEG forecasts of $15.62 billion and $1.81. Still, revenue growth cooled from 12.2% last quarter. On a constant currency basis, consulting crept up just 1% and software climbed 8%.
Chief Executive Arvind Krishna described the quarter as “a strong start to the year,” adding, “AI continues to be a tailwind for our global business.” IBM reiterated its forecast for over 5% constant-currency revenue growth in 2026 and roughly $1 billion in additional free cash flow—money remaining after operating expenses and capital investments. IBM
IBM’s management insists AI remains a boost for the underlying business. Finance chief James Kavanaugh told Reuters that generative AI applied to mainframe modernization is actually strengthening, rather than weakening, the company’s mainframe portfolio. According to IBM, clients using watsonx Code Assistant for Z are expanding mainframe capacity roughly three times as quickly as those who aren’t.
No clear relief for the market. IBM’s software division—Red Hat and watsonx are in that bucket—posted an 11.3% gain. “We do not think Q1’s results validated those fears” about AI disruption, CFRA analyst Brooks Idlet told clients. Still, the shares fell anyway, with investors unimpressed by the pace of growth in software and consulting. Reuters
The rout didn’t take long to hit hard. ServiceNow slid almost 15%, Microsoft slipped 2.7%, and Adobe was off 3%. Texas Instruments, on the other hand, caught a bid as its bullish outlook gave a lift to chip stocks. Tech’s sharp divergence signals “a lot bigger range of outcomes,” according to UBS strategist Kiran Ganesh. Reuters
IBM posted some notable gains. Infrastructure sales climbed 15%, and IBM Z revenue surged 51% during the quarter. Data revenue increased 19%, while Red Hat put up a 13% rise on a reported basis. Consulting revenue was less impressive, up 4% as reported and just 1% when adjusting for currency effects.
IBM faces a risk if investors’ patience runs thin. CEO Krishna noted that Middle East events “didn’t impact us in the first quarter,” though the company’s filing flagged that softer client spending or missed innovation could weigh on performance. Investors are still digesting whether products from Anthropic or similar players could start to erode IBM’s software, services, and COBOL-related modernization business. IBM
IBM bumped its quarterly dividend up to $1.69 per share—marking the 31st consecutive year of increases. The company handed back $1.6 billion to shareholders in dividends during the first quarter. As of the end of March, IBM reported $11.8 billion in cash, restricted cash, and marketable securities.
