International Business Machines Corporation IBM is scheduled to report second-quarter 2025 earnings on July 23. The Zacks Consensus Estimate for sales and earnings is pegged at $16.59 billion and $2.64 per share, respectively. Earnings estimates for IBM for 2025 and 2026 have remained static at $10.95 and $11.66 per share, respectively, over the past 60 days.
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The cloud and data platform delivered a four-quarter earnings surprise of 7.9%, on average, beating estimates on each occasion. In the last reported quarter, the company pulled off an earnings surprise of 12.7%. (See the Zacks Earnings Calendar to stay ahead of market-making news.)
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Our proven model does not predict an earnings beat for IBM for the second quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
IBM currently has an ESP of 0.00% with a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank stocks here.
During the second quarter, IBM collaborated with the Masters tournament organizers to launch a wide range of artificial intelligence (AI)-native features to deliver an immersive digital experience for golf fans. The company offered predictive analytics during the game, forecasting how specific holes were likely to be played based on past information. Data-backed recaps throughout the tournament of how each hole had played were available on the APP and the website. These are likely to have generated incremental revenues for the Consulting segment.
The Zacks Consensus Estimate for revenues from the Consulting segment is pegged at $5.21 billion, while our model projects revenues of $5.17 billion.
During the to-be-reported quarter, IBM extended its multi-year partnership with Microsoft Corporation MSFT by establishing a new Microsoft Practice within IBM Consulting. Leveraging the strengths of both companies, the collaboration aims to develop innovative offerings and industry-specific solutions across various verticals such as retail, consumer packaged goods, government, financial services and supply chain. Complementing IBM Copilot Runway and IBM Consulting Azure OpenAI Services, it intends to deliver customized solutions to help businesses unlock new growth opportunities, navigate complex AI, facilitate seamless cloud transition and accelerate digital transformation
IBM acquired Hakkoda Inc., a prominent data consultancy provider, for an undisclosed amount in the quarter. The acquisition is expected to strengthen IBM’s data expertise and augment its capability to support clients’ AI transformation initiatives. These are likely to have translated into incremental revenues in the Software segment.
The Zacks Consensus Estimate for revenues from the Software segment is pegged at $7.48 billion, while our model projects revenues of $7.52 billion.
However, despite solid hybrid cloud and AI traction, IBM faces stiff competition from Amazon Web Services and Microsoft’s Azure. The company’s ongoing, heavily time-consuming business model transition to the cloud is a challenging task. Weakness in its traditional business and foreign exchange volatility remain significant concerns. Increasing pricing pressure is eroding margins, and profitability has trended down over the years, barring occasional spikes.
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