Key TakeawaysIBM revised its 2026 revenue growth projection downward to 4%–5%, retreating from previous guidance of over 5%Mainframe Z system sales collapsed 42% during the second quarter, pulling infrastructure revenue down 7%Second-quarter revenue totaled $17.16 billion, falling short of the $17.58 billion analyst consensusAdjusted earnings per share of $2.93 came in below the $2.97 Wall Street forecastCEO Arvind Krishna attributed the shortfall to delayed “large capex deals” with major customers, insisting demand remains intact but postponedIBM revised its annual revenue growth projections downward on Wednesday following a disappointing second-quarter performance, as enterprise clients scaled back software investments to prioritize artificial intelligence infrastructure spending.Shares of IBM initially climbed approximately 2% after the earnings announcement before retreating. The stock had previously experienced a devastating 25% single-day decline on July 14 when the company preannounced weaker-than-expected results — marking its worst trading session in over 100 years.International Business Machines Corporation, IBMSecond-quarter revenue registered at $17.16 billion, representing modest 1% year-over-year expansion but undershooting the $17.58 billion Street consensus. Adjusted earnings per share reached $2.93, likewise missing analyst expectations of $2.97.IBM now projects full-year 2026 revenue expansion of 4% to 5%, a downgrade from previous guidance calling for “greater than 5%” growth. The revised midpoint falls beneath the average analyst projection of 4.8% growth.CEO Arvind Krishna addressed the disappointment directly at the start of the earnings call. “It comes down to execution. That is where we fell short in the second quarter,” Krishna stated. “A lot of the demand is deferred, not destroyed.”Krishna explained that the primary challenge stemmed from “large capex deals at large clients” failing to materialize during Q2. He noted that approximately one-third of those pending transactions have subsequently closed during the current third quarter.Mainframe Business Suffers Steepest DeclineRevenue from Z mainframe systems plummeted 42% in the second quarter, exceeding the company’s internal expectations for weakness. CFO Jim Kavanaugh indicated that IBM had anticipated “a point or two” of headwind from the mainframe refresh cycle but instead experienced more than five percentage points of drag on consolidated growth.Kavanaugh emphasized that customers remain committed to the mainframe platform. “We see no evidence of clients moving off a mainframe,” he stated, projecting improvement in the segment during the second half of the year.Total infrastructure revenue declined 7% to $3.84 billion. Consulting revenue remained essentially unchanged.Software revenue advanced 5% to $7.76 billion, though this fell short of the $7.88 billion analyst estimate and represented a significant deceleration from 11% growth recorded in the first quarter.Efficiency Initiatives and Breakup SpeculationKavanaugh disclosed that IBM is elevating its cost-reduction target beyond $5.5 billion in annual run-rate savings by year-end — an increase from the previous $5.5 billion objective. He credited these initiatives with enabling IBM to expand operating profit 5% and widen margins 30 basis points despite minimal revenue growth.Addressing speculation regarding a potential corporate breakup, Kavanaugh firmly rejected the notion. “We remain confident IBM is strongest as an integrated company,” he declared.CFRA analyst Brooks Idlet provided a nuanced perspective: “For the broader software sector, this should be treated as a positive print, with IBM’s software woes more likely to reflect specific IBM-related hardware issues.”IBM’s inventory increased $600 million compared to the prior year, with Kavanaugh explaining that he strategically purchased server storage components to preempt anticipated price increases from hardware vendors.Wall Street analysts have reduced earnings per share estimates for both 2026 and 2027 following the July 14 profit warning. Thomas Martin of Globalt Investments offered a blunt assessment: “It’s going to be in the penalty box for a while.”The post IBM (IBM) Stock: CEO Insists Customer Demand ‘Delayed, Not Lost’ Following Brutal Selloff appeared first on Blockonomi.