Story perspectives

IBM Q1 Revenue Jumps 9% as Stock Falls 6.5%

4/23/2026

Summary

IBM Revenue Surge

IBM reported first-quarter revenue of $15.92 billion, a 9% increase, while its shares fell about 6.5% after hours on April 22, 2026.
Infrastructure revenue, including mainframes, rose 15.2% to $3.33 billion, with CFO James Kavanaugh saying Watsonx Code Assistant is boosting mainframe use after Anthropic’s COBOL claim.
CEO Arvind Krishna said IBM’s Middle East growth is its strongest in decades, noting the firm can absorb a temporary Strait of Hormuz closure.

Summary

IBM Shares Plunge

IBM’s earnings report triggered the steepest share-price sell-off in decades, a trend that began in February after Anthropic’s AI tool targeting mainframes.
The company’s software-centric shift relies on its 2022 Red Hat purchase and later acquisitions of HashiCorp and Confluent.
Jefferies analysts said investors hoped for stronger software results but feared customers might delay purchases while testing rival AI tools.
IBM’s stock decline pulled Dow futures down roughly 200 points.

Summary

IBM Mainframe Surge

IBM's Z mainframe hardware revenue rose 51% YoY, lifting the segment to $3.33 billion, a 15% gain.
Rob Thomas, IBM VP of software, posted on LinkedIn that AI strengthens, not weakens, the mainframe case.
IBM expects pre-tax margin to rise about 1% after the $11 billion Confluent deal closed in March.
IBM shares have fallen 15% YTD, while management reaffirmed 2026 guidance of 5% revenue growth and a $1 billion cash flow increase.

Summary

Krishna Celebrates Diwali

CEO Arvind Krishna attended a Diwali celebration in the Oval Office on Oct. 21, 2025.
Finance chief Jim Kavanaugh warned a hardware supply chain is constraining Red Hat Enterprise Linux sales.
Kavanaugh said the slowdown reflects a federal lack of signings and the shutdown’s fourth-quarter impact.
Consulting revenue hit $5.27 billion, a 4% rise, below the $5.28 billion consensus.
Krishna said Middle-East developments, despite the Iran-U.S. war that began Feb. 28, did not affect IBM’s results.

History

Historical Context

IBM's acquisition of Red Hat for $34 billion in 2019 marked a significant shift towards cloud computing, enhancing its competitive stance against Microsoft and Amazon. This move followed IBM's long history in IT services, dating back to the 1970s, and reflects its ongoing adaptation to market demands, particularly in software and AI, amidst rising competition in the tech landscape.

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IBM Revenue Surge

IBM reported first-quarter revenue of $15.92 billion, a 9% increase, while its shares fell about 6.5% after hours on April 22, 2026.
Infrastructure revenue, including mainframes, rose 15.2% to $3.33 billion, with CFO James Kavanaugh saying Watsonx Code Assistant is boosting mainframe use after Anthropic’s COBOL claim.
CEO Arvind Krishna said IBM’s Middle East growth is its strongest in decades, noting the firm can absorb a temporary Strait of Hormuz closure.

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