IBM Reports $17 Billion Preliminary Revenue As AI Bookings Top $12 Billion

IBM's preliminary second-quarter revenue came in at roughly $17 billion while cumulative AI bookings passed $12 billion, The Next Web reported, citing IBM's preliminary update and chief executive Arvind Krishna's investor letter.

Revenue rose 1 per cent from a year earlier but fell below the roughly $18 billion analyst expectation .

IBM shares dropped as much as 17 per cent in premarket trading after the update, according to The Next Web.

IBM Preliminary Revenue Missed The $18 Billion Estimate

In the preliminary update, IBM put software-division growth at five per cent and Red Hat revenue growth at 11 per cent.

Both units still missed forecasts, while consulting was described as essentially flat and infrastructure revenue declined seven per cent as clients pulled back on mainframe and storage purchases.

Krishna attributed the quarter to execution issues, spending shifts and large deals that did not close before quarter end.

His investor letter added that some clients redirected late-June capital spending to server hardware, storage systems and memory before expected tariff-related price increases.

Adjusted earnings per share were described as nearly three dollars, below the roughly three-dollar consensus cited by The Next Web.

Preliminary figures put gross profit margin at just under 58 per cent, down about one percentage point from a year earlier, and pre-tax margin at just over 14 per cent, the report described.

AI Bookings Surpassed $12 Billion Cumulatively

Artificial intelligence remained the stronger part of the update.

IBM indicated that cumulative AI bookings have surpassed $12 billion, covering demand for AI consulting and infrastructure even as the broader preliminary result missed revenue expectations.

Among the company's AI partnerships, The Next Web listed IBM's recent enterprise cybersecurity tie-up with OpenAI.

Krishna has framed AI as the growth engine for the company's revenue mix, but the preliminary update did not attach the AI bookings total to recognised quarterly revenue.

Monday's share-price reaction followed earlier gains in IBM's stock.

The shares had risen 30 per cent in May before Monday's drop, helped by bullish analyst coverage around IBM's AI and enterprise software positioning, according to The Next Web.

Full Quarterly Results Are Due Later This Month

IBM plans to release full quarterly results later this month.

The preliminary update did not name the large deals that failed to close, identify the clients that shifted spending towards servers and memory, or break the $12 billion AI bookings total into consulting and infrastructure revenue.