IBM Stock Falls By 10% As Q1 Results Failed To Calm Investors

Catenaa, Thursday, April 23, 2026- IBM stock plummeted as much as 10% on Thursday morning as its Q1 results failed to reassure investors of the AI impact on the company.

Software sales grew more than expected, but revenue in the company’s consulting segment came in shy of estimates.

BM said adjusted earnings came to $1.91 a share, above analysts’ expectations of $1.81. Revenue reached $15.9 billion, ahead of forecasts near $15.7 billion, with IBM software remaining the main growth driver in the quarter.

IBM’s software unit brought in $7.1 billion, helped by Red Hat, which posted 13% year-over-year growth. IBM said the hybrid cloud business continued to support results, a setup that combines in-house systems with public cloud services.

IBM Chief Executive Arvind Krishna said the company still expects more than 5% constant-currency revenue growth and about $1 billion in additional free cash flow this year. 

IBM shares are down over 21% so far in 2026 as investors continue to weigh steady execution against a tougher software backdrop.

Wall Street may view that as a cautious outlook given the company’s recently closed Confluent acquisition, which is expected to contribute additional revenue.

Investors have been selling off software stocks over fears that AI will disrupt their business models and replace their software products.

In February, IBM plummeted more than 20%, its largest monthly decline in decades, after AI developer Anthropic unveiled a tool aimed at modernizing a programming language that runs on IBM mainframes.

IBM has pushed back against that narrative, arguing that AI will make its offerings more attractive.

“As clients scale use cases, AI continues to be a tailwind for our global business,” IBM CEO Arvind Krishna said in the company’s earnings release.

The company, long known for its mainframe computers, has been on an acquisition spree in recent years as it positions itself as a hybrid cloud software provider through deals such as Red Hat in 2019, HashiCorp last year, and most recently, Confluent.

Analysts have said IBM’s deep customer ties and AI offerings, such as the Watsonx Code Assistant, a coding ‌modernization tool for the mainframe, could help it against ​rival AI tools.

CFO James Kavanaugh told Reuters that clients ​using the tool are seeing faster ​growth in mainframe consumption. “Gen AI in the modernization of the mainframe is actually ‌an accelerator and accretive to the mainframe ​portfolio overall,” he said.