IBM cuts yearly revenue growth forecast as customers prioritize AI infrastructure spending

Software revenue in the second quarter rose 5% to $7.76 billion but missed an average estimate of $7.88 billion.

The company's second-quarter revenue ticked up 1% to $17.16 billion, missing estimates of $17.58 billion. IBM reported a net profit of $2.17 billion, a dip from a year earlier, while adjusted profit of $2.93 per share missed an average estimate of $2.97.

IBM cut its annual revenue growth forecast on Wednesday, days after warning that corporate spending was shifting toward AI-focused data-center gear at the expense of its software and mainframe computers.

The company also missed profit and revenue expectations for the second quarter ended June 30. Executives sought to reassure shareholders that customers prioritized spending on AI in the quarter but were not looking to move away from mainframes in the longer term.