US EditionIBM's slower revenue growth fans AI worries, shares fall
Revenue rose 9% but slower software growth and AI competition fears pushed IBM shares down 8% in extended trading, despite beating estimates and keeping guidance.
- IBM shares fell 6.5% in after-hours trading on Wednesday despite reporting first-quarter revenue of $15.92 billion, beating the $15.62 billion analyst estimate compiled by LSEG.
- Investors expressed concerns that software revenue growth slowed during the quarter, fanning fears artificial intelligence tools could disrupt IBM's core business model.
- High-Margin software revenue reached $7.05 billion with 11% growth, while infrastructure climbed 15.2% to $3.33 billion, driven by strong adoption of IBM's latest mainframe systems.
- Management reiterated its full-year 2026 outlook, projecting revenue growth of over 5% at constant currency and a $1 billion increase in free cash flow despite software segment challenges.
- IBM completed the $11 billion Confluent acquisition in mid-March while remaining on track to deliver a large-scale fault-tolerant quantum computer by 2029, signaling continued strategic expansion.
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IBM Q1 2026 Earnings Call: Complete Transcript - IBM (NYSE:IBM)
The US technology company IBM is growing more slowly than last and is thus disappointing the expectations of investors. Worrying about AI competition weighs on the share.
"AI continues to be a positive factor for our business," said IBM's CFO, Jim Kavanaugh.
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