Oppenheimer has downgraded IBM's stock from 'Outperform' to 'Perform' after the company's preliminary second-quarter earnings fell significantly below expectations, reporting revenues of $17.2 billion. This shortfall was attributed to a decline in demand for transaction processing software, clients shifting budgets towards servers and storage, and delays in finalizing major contracts. Oppenheimer warned that these challenges could hinder IBM's ability to meet its annual targets, particularly in achieving a targeted double-digit growth in software by 2026 and 2027. While some sectors like Red Hat and server storage show promise, they aren't sufficient to counter the overall downturn in enterprise technology spending. Despite the downgrade, Oppenheimer maintains that IBM's long-term investment potential remains, albeit with slower development due to the shift towards AI-related infrastructure.

Oops, something went wrong

Skip to navigation Skip to main content Skip to right column

Oppenheimer Downgrades IBM Stock After Earnings Miss Triggers Massive Sell-Off

Nauman Khan

Wed, July 15, 2026 at 4:07 PM EDT1 min read

IBM \ -2.70%

This article first appeared on GuruFocus.

International Business Machines ( NYSE:IBM) was downgraded to Perform from Outperform by Oppenheimer after the company's preliminary second-quarter results fell short of expectations across all major business segments.

Oppenheimer said IBM generated preliminary second-quarter revenue of $17.2 billion, below both its estimate and Wall Street forecasts. The brokerage attributed the shortfall to weaker demand for transaction processing software, customers shifting spending toward servers and storage, and delays in closing several large contracts near the end of the quarter.

The firm said those headwinds could make it more challenging for IBM to meet its full-year guidance and achieve its targeted double-digit constant-currency software growth in 2026 and 2027. Oppenheimer added that while businesses including Red Hat, HashiCorp, Confluent, and the server and storage segments remained areas of strength, they were not enough to offset broader weakness.

The brokerage said IBM's longer-term investment case remains intact but may take more time to develop as enterprise technology spending continues to shift toward artificial intelligence infrastructure and related hardware.