IBM Downgrade by Oppenheimer
On Wednesday, 15 July 2026, Oppenheimer downgraded IBM to a Perform rating and removed its previously set $350 price target in a research note released ahead of IBM’s scheduled earnings call on 22 July 2026. The downgrade followed IBM’s pre‑announcement of its second‑quarter 2026 results, which showed total revenue of $17.2 billion, representing a modest 1% year‑over‑year increase and falling short of both Oppenheimer’s and consensus expectations across every business segment.
Management attributed the revenue shortfall to weakness in Transaction Processing software, a shift in customer buying behavior toward servers and storage driven by memory‑cost pressures, and the slippage of several large deals at the quarter‑end. Software revenue grew 5% year‑over‑year, well below Oppenheimer’s 12% growth estimate. The miss was linked to the mainframe‑associated software stack and deals that slipped past the quarter‑end, though the company noted that these deals were not lost. The software shortfall was partially offset by RedHat’s sequential growth of 11% and continued strength in the HashiCorp and Confluent offerings.
Infrastructure revenue declined 7% year‑over‑year, exceeding Oppenheimer’s forecast of a 5% decline, as strength in distributed infrastructure was insufficient to counteract the mainframe weakness. Consulting revenue was flat year‑over‑year, slightly under Oppenheimer’s expectation of 1% growth.
Oppenheimer’s analyst Param Singh stated that achieving double‑digit cloud‑computing (CC) growth in IBM’s software business for calendar years 2026 and 2027 will be difficult without additional large acquisitions or a material catch‑up in large‑deal wins. Singh concluded that the software bull thesis will take longer to materialize and that IBM’s stock is likely to remain range‑bound in the near term.
The note also highlighted that the ongoing shift in IT spending toward hardware should benefit server and storage providers, while infrastructure software vendors may face near‑term risk from similar IT‑budget compression.