IBM Q1 Tops Estimates on Software Growth, Stock Slips

IBM beat Wall Street expectations on both revenue and earnings per share in the first quarter of 2026, powered by double-digit software growth, a stronger margin profile and a raised dividend. Yet shares slipped after the report, reflecting a cautious market reaction even as the numbers cleared the bar.

Revenue and Earnings Beat

Revenue rose 9 percent year over year to $15.92 billion, or 6 percent on a constant currency basis, topping the $15.62 billion consensus. Earnings per share came in at $1.91, ahead of the $1.81 consensus, a 5.52 percent surprise, according to CNBC, Benzinga, StockTitan and the Motley Fool transcript.

Non-GAAP gross margin expanded 110 basis points to 57.7 percent, and pre-tax income margin rose 140 basis points to 13.4 percent, signaling a higher-quality mix alongside the top-line growth.

Segment Breakdown

Software revenue grew 11 percent, or 8 percent at constant currency, making it the fastest-growing segment. Consulting rose 4 percent, or 1 percent at constant currency, while Infrastructure climbed 15 percent, or 12 percent at constant currency. The software momentum reinforced IBM's ongoing shift toward higher-margin recurring revenue streams.

Dividend and Outlook

IBM raised its dividend to $1.69 per share. For full-year 2026, the company reiterated an outlook of greater than 5 percent constant currency revenue growth and roughly $1 billion in year-over-year cash flow growth.

Despite the beat and the dividend increase, shares fell in the session following the release, Benzinga reported. The reaction added IBM to a short list of companies that delivered beats on Wednesday only to see muted or negative market responses, a reminder that in a market hitting fresh records, expectations have risen faster than results in some corners of enterprise technology.