{"slug": "ibm-stock-rises-as-cfo-explains-what-changed-in-its-q2-earnings", "title": "IBM stock rises as CFO explains 'what changed' in its Q2 earnings", "summary": "IBM stock rose after CFO Jim Kavanaugh explained that AI infrastructure buildouts, not a software slowdown, drove the company's Q2 earnings warning. IBM reported Q2 net sales of $17.2 billion (up 1%) and diluted EPS of $2.93 (up 5%), matching lowered estimates, but lowered its 2026 constant currency revenue growth forecast to 4%-5% from \"more than\" 5%. Kavanaugh said hardware and memory price increases in the last 30 days caused companies to prioritize infrastructure investments, and IBM raised its annual cost savings target above $5.5 billion.", "body_md": "IBM ([IBM](https://finance.yahoo.com/quote/IBM/)) has a lot to prove today with its earnings report after a [shock warning a week ago](https://finance.yahoo.com/markets/stocks/article/after-ibms-epic-stock-crash-wall-street-chatter-is-big-blue-should-break-up-135450235.html) that upended what had been a successful tech turnaround story.\n\nThe quality of the numbers out after the close underscores that Big Blue appears to be in the AI disruption zone. Sales in IBM's infrastructure business dropped 7%, and consulting sales were unchanged. The software business grew sales by only 5%, slowing from an 11% growth rate in the first quarter.\n\n**The earnings insight:**\n\n-\n**Q2 net sales:**+1% to$17.2 billion versus estimates for $17.2 billion. -\n**Q2 diluted earnings per share:**+5% to$2.93 versus estimates for $2.93. -\n**2026 outlook:** IBM guided for full-year constant currency revenue growth in the range of 4% to 5%. Previously, it forecast full-year constant currency revenue growth of \"more than\" 5%.\n\nKeep in mind that on July 14, [IBM preannounced results](https://finance.yahoo.com/markets/stocks/article/ibm-stock-closes-down-more-than-25-after-preannounced-earnings-results-150605880.html) that were well below consensus estimates for the second quarter, so expectations were already low heading into today's report card. IBM said it saw second quarter sales of $17.2 billion versus the analyst estimates of $17.85 billion at the time. Non-GAAP earnings are expected to be $2.93 compared to estimates of $3.02.\n\nSince the warning, [Yahoo Finance AlphaSpace](https://finance.yahoo.com/about/promos/gold/alphaspace?100003557) data shows Wall Street has slashed its earnings per share estimates for IBM considerably for 2026 and 2027.\n\nYahoo Finance caught up with IBM's veteran CFO Jim Kavanaugh to discuss the results. Kavanaugh is also on the board of directors of telecom giant T-Mobile ([TMUS](https://finance.yahoo.com/quote/TMUS/)).\n\nHere's what we learned on a few fronts.\n\n**On the earnings warning last week:** \"What's new is right now … companies, given the AI investments that they are going to make, which I think ultimately will get monetized and valued, today they're building out the infrastructure portfolio to support that future of the AI realization. What changed is the level of magnitude given the extreme price increases that the hardware providers and memory providers have went to the market with in the last 30 days.\n\n\"We did see the same thing last quarter inside IBM. Our inventory is up $600 million year over year because I went out consciously, made economically prudent buy-aheads for server storage parts, so I can protect against future price increases. That is happening in the marketplace. I don't think that has anything to do with AI eating software or anything else. This is just they're filling out the infrastructure layer as they move forward. It's as simplistic as that.\"\n\n**On the need to get more aggressive on cost cuts: **\"We've been driving … inception to date the last few years … $5.5 billion dollars of annual exit run rate [in cost] savings by the end of the year. We'll state tonight that we're taking that up above $5.5 billion dollars overall. That's generating about 300 basis points of operating leverage just on productivity alone.", "url": "https://wpnews.pro/news/ibm-stock-rises-as-cfo-explains-what-changed-in-its-q2-earnings", "canonical_source": "https://ca.finance.yahoo.com/news/ibm-stock-rises-as-cfo-explains-what-changed-in-its-q2-earnings-201452259.html", "published_at": "2026-07-22 20:14:52+00:00", "updated_at": "2026-07-22 20:22:56.385659+00:00", "lang": "en", "topics": ["artificial-intelligence", "ai-infrastructure", "ai-chips"], "entities": ["IBM", "Jim Kavanaugh", "T-Mobile", "Yahoo Finance"], "alternates": {"html": "https://wpnews.pro/news/ibm-stock-rises-as-cfo-explains-what-changed-in-its-q2-earnings", "markdown": "https://wpnews.pro/news/ibm-stock-rises-as-cfo-explains-what-changed-in-its-q2-earnings.md", "text": "https://wpnews.pro/news/ibm-stock-rises-as-cfo-explains-what-changed-in-its-q2-earnings.txt", "jsonld": "https://wpnews.pro/news/ibm-stock-rises-as-cfo-explains-what-changed-in-its-q2-earnings.jsonld"}}