IBM cuts sales outlook as analysts demand proof on delayed deals
IBM trimmed its 2026 revenue growth target, but kept its free-cash-flow goal as Wall Street watches whether pushed deals close.
By Frankie Delgado · News Reporter
3 min read
IBM has lowered the bar for 2026 sales growth, and Wall Street is already asking whether the tech giant can clear it.
The Armonk, New York-based company said Wednesday that it now expects full-year revenue growth, measured at constant currency, of 4% to 5%. Its prior forecast called for growth above 5%.
Analysts focused less on the cut itself and more on what comes next: execution. In a Thursday note, J.P. Morgan strategists led by Brian Essex said IBM’s latest results were close to the firm’s revised expectations after the company’s earlier warning, and that full-year guidance came in better than feared.
Still, J.P. Morgan said IBM must now deliver against its updated outlook to rebuild investor confidence.
Cash-flow target stays intact
One number IBM did not trim was its free-cash-flow goal. The company maintained its expectation that free cash flow will rise by about $1 billion in 2026.
J.P. Morgan called that a positive part of the second-quarter update, saying the bank had expected IBM to reduce that target too.
The company reported second-quarter revenue of $17.16 billion for the period ended June 30, below estimates of $17.58 billion cited in the MarketWatch report. According to J.P. Morgan, IBM’s management pointed to tens of large deals that were delayed rather than lost, with about one-third of those deals closing in July.
That distinction matters for investors. J.P. Morgan said the tone from IBM executives on the earnings call suggested confidence that the issue was timing, rather than a lasting demand problem. Even so, the strategists said they do not expect a recovery in IBM’s share price until investors see proof that the company can hit its new revenue target.
Shares slip after results
IBM shares were down 2.5% in premarket trading Thursday. The stock had already fallen more than 2% during Wednesday’s regular session before the earnings release.
Stifel analysts led by David Grossman wrote Wednesday that the delayed deals were among the most notable details in IBM’s results. They said it was unclear exactly when those deals closed, but added that IBM indicated it had not cut prices to move the transactions along faster.
Oppenheimer analysts Param Singh and Jake Heimowitz said they expect IBM’s return to constant-currency growth above 5% to take several quarters. In their view, the company would need to focus on organic growth instead of major acquisitions and complete the deals that slipped from the prior quarter.
The message from analysts was plain: IBM’s guidance cut may have reset expectations, but it has also sharpened the test. The company has kept its cash-flow promise and pointed to delayed business coming through. Now investors are waiting for the numbers to show it.
This story draws on original reporting from MarketWatch.