IBM · Q2 FY2026
INTERNATIONAL BUSINESS MACHINES CORP Q2 FY2026 earnings analysis
By SageNoodle ResearchNeutral
| Metric | Actual | Estimate | Result |
|---|---|---|---|
| Revenue | $17.16B | $16.98B (yr ago) | Beat |
| EPS | $2.27 | $2.31 (yr ago) | Miss |
| Free Cash Flow | $2.37B | $1.49B (yr ago) | Beat |
| Gross Margin | 57.7% | 58.8% (yr ago) | Miss |
| Operating Margin | 14.4% | 15.3% (yr ago) | Miss |
What changed
Revenue increased 1.1% year over year as 5.1% Software growth and nearly flat Consulting were partly offset by a 7.4% Infrastructure decline. GAAP gross margin contracted 1.1 percentage points and diluted EPS fell 1.7%, although table-derived free cash flow improved to $2.37B and management raised its full-year constant-currency revenue outlook to 4.0%-5.0%.
Impact on the investment thesis
There was no prior SageNoodle fair value to revise, so we initiate fair value at $254 per share. The higher revenue outlook is offset by weaker GAAP margins, late-quarter demand headwinds and acquisition-related balance-sheet pressure.