IBM (NYSE:IBM) reported second-quarter revenue of $16.98 billion, up 1% from the prior year, while diluted earnings per share reached $2.80.
Software revenue came in below expectations because several transactions closed later than anticipated. Infrastructure and Consulting delivered growth during the quarter, leading the company to raise its full-year revenue outlook to 4% to 5% while maintaining its free cash flow expectation of more than $13.5 billion.
Technology remained a major focus throughout the earnings call. Executives discussed continued investment in watsonx, growth in generative AI engagements, AI capabilities across IBM Z and Power systems, new security tools for AI-generated code, and progress in quantum computing.
The discussion centered on building enterprise technology that supports AI deployment, governance, and long-term innovation.
Why It Matters: IBM presented AI as part of a larger technology vision that spans enterprise operations over multiple years. The company’s investments focus on creating the foundation needed to support AI adoption while continuing to advance enterprise computing.
- Expanding the Watsonx AI Portfolio: IBM continues to expand the watsonx portfolio with new AI capabilities. The company added orchestration, governance, and agentic AI features that connect with enterprise data and existing business applications. CEO Arvind Krishna said, “We’re helping clients build and orchestrate agents while enabling them to securely use their enterprise data.” IBM’s approach centers on integrating AI into existing enterprise environments instead of treating it as a standalone application.
- Generative AI Consulting Moves Into Implementation: Generative AI consulting remains an important source of business growth. IBM said its generative AI business has exceeded $9 billion since launch, with about one-fifth of engagements moving into implementation. Many projects combine consulting services with IBM software and infrastructure. The results show organizations continuing to move AI initiatives from pilot programs into production environments.
- Infrastructure Supports Enterprise AI Growth: Infrastructure investments continue alongside AI development. IBM discussed momentum across IBM Z, Power, and Storage, including AI acceleration capabilities built into its systems. The company also introduced IBM Power11 with features designed to support AI workloads while improving resilience and operational efficiency. Hardware continues to play an important role in enterprise AI deployments.
- Project Lightwell Expands AI Security Efforts: AI security remains a major area of investment. IBM introduced Project Lightwell, an open-source tool that identifies vulnerabilities in AI-generated code before software reaches production. Krishna said the initiative supports responsible AI adoption while helping improve software quality. The announcement adds another security capability to IBM’s growing AI portfolio.
- Quantum Computing Remains a Long-Term Investment: Quantum computing remains part of IBM’s long-term technology roadmap. The company announced plans for IBM Quantum Starling, its first large-scale fault-tolerant quantum computer, with a target launch in 2029. IBM continues investing in quantum hardware, software, and developer tools while advancing its AI initiatives. The company presented quantum computing as another area of long-term enterprise technology development.
Go Deeper -> IBM’s Earnings Report – MarketBeat
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