INTERNATIONAL BUSINESS MACHINES CORP Earnings Summary — Q1 2026

• Revenue for Q1 2026 reached $15.9B, marking a strong 9.46% year-over-year increase.
• Net Income grew to $1.21B, a 15.3% increase compared to Q1 2025, showing improved profitability.
• Operating income of $1.86B reflects a significant recovery from the $1.61B reported in the same quarter last year.
• Research & Development expenses increased by 11.4% YoY to $2.17B, signaling continued investment in AI and high-growth software.
• The quarterly results demonstrate the structural shift toward high-margin Hybrid Cloud and Watsonx AI platforms is gaining scale.
• Cost of revenue was well-managed at $6.97B, allowing gross profit to expand to $8.95B (56.2% margin).

Management continues to focus on its 'Shrink to Grow' strategy, pivoting away from legacy service segments toward Watsonx and enterprise AI initiatives following the Kyndryl spin-off.

Improving

Year-over-year revenue growth has accelerated from flat levels (0.55%) in early 2025 to high single digits (9.46%) in early 2026, indicating the portfolio transformation is delivering results.

IBM is positioned as a high-quality compounder with its focus on Red Hat as an architectural backbone. The integration of AI into its hybrid cloud offerings (Watsonx) is expected to drive further operating leverage and margin expansion.