✦ Power and Storage: Up 37% With a $500 Million BacklogNarrow moat

IBM (IBM) — the future bets

IBM's Power and Storage had their best quarter while the mainframe fell, because clients were scrambling for exactly that kind of hardware.

While the mainframe fell, IBM's other hardware had a record. Distributed Infrastructure, which holds the Power servers and Storage systems, grew 37.3% in the second quarter of 20261, "our strongest quarter on record"2. IBM said Power and Storage had "built up an order backlog of nearly $500 million"3.

Hybrid Infrastructure lines, Q2 2026 growth (%)Distributed Infrastructure+37.3%Hybrid Infrastructure total-10.3%IBM Z-42.0%IBM Form 10-Q Q2 2026; magnitudes, signs in labels
One line up by a third, the total still down.

The cause is the same one that hurt IBM Z. Clients redirected spending to servers, storage and memory "to secure supply-constrained infrastructure ahead of expected price increases"4. Where IBM had products in that category, it won.

IBM does not report Distributed Infrastructure revenue in dollars. It sits with IBM Z inside Hybrid Infrastructure, which was $2,570 million in the quarter, down 10.3%5. The growth of one part was not enough to offset the other.

This is a bet on a market IBM has not led: its filing names Dell, Hewlett-Packard Enterprise, NetApp and Pure Storage among its principal infrastructure competitors6. IBM's advantage is to sell Power and Storage into clients who already run its mainframes and software.

The growth came from a low base in a line IBM seldom highlights. In the 2022 report Distributed Infrastructure grew 6.6%7; in 2025 it fell 1.8 percent8. A jump to 37% in one quarter after years of low single digits is the signature of a demand shock rather than a change in competitive position, which is why the backlog, not the growth rate, is the figure to follow.

The backlog is the figure to watch. At nearly $500 million, it should support growth into the third quarter; if IBM reports a smaller backlog or single-digit growth by the end of 2026, the surge was a response to a shortage rather than a gain in position.

Moat trajectory: Widening

+37.3% in Q2 2026; backlog nearly $500M.

The number that tests this moat
Reported
Distributed Infrastructure revenue growth, latest quarter
+37.3% (Q2 2026)

Power and Storage against larger rivals; single-digit growth by year-end would mean the surge was a shortage, not a share gain.

Source: IBM Form 10-Q, Q2 2026 ↗
References
  1. ReportedDistributed Infrastructure, which holds the Power servers and Storage systems, grew 37.3% in the second quarter of 2026, "our strongest quarter on record".
    IBM Form 10-Q for the quarter ended 30 June 2026 - segment results, revenue categories, RPO, the Confluent acquisition and management discussion - Infrastructure and Financing segment results. — Q2 2026 · publ. 23 July 2026 · source ↗
  2. ReportedDistributed Infrastructure, which holds the Power servers and Storage systems, grew 37.3% in the second quarter of 2026, "our strongest quarter on record".
    IBM Form 10-Q for the quarter ended 30 June 2026 - segment results, revenue categories, RPO, the Confluent acquisition and management discussion - Infrastructure and Financing segment results. — Q2 2026 · publ. 23 July 2026 · source ↗
  3. ReportedIBM said Power and Storage had "built up an order backlog of nearly $500 million".
    IBM second-quarter 2026 results release, Form 8-K exhibit 99.1 - cash, debt, acquisitions, free cash flow, backlog and full-year expectations. — Q2 2026 · publ. 22 July 2026 · source ↗
  4. ReportedThe cause is the same one that hurt IBM Z. Clients redirected spending to servers, storage and memory "to secure supply-constrained infrastructure ahead of expected price increases".
    IBM Form 10-Q for the quarter ended 30 June 2026 - segment results, revenue categories, RPO, the Confluent acquisition and management discussion - Infrastructure and Financing segment results. — Q2 2026 · publ. 23 July 2026 · source ↗
  5. ReportedIt sits with IBM Z inside Hybrid Infrastructure, which was $2,570 million in the quarter, down 10.3%.
    IBM Form 10-Q for the quarter ended 30 June 2026 - segment results, revenue categories, RPO, the Confluent acquisition and management discussion - Infrastructure and Financing segment results. — Q2 2026 · publ. 23 July 2026 · source ↗
  6. ReportedThis is a bet on a market IBM has not led: its filing names Dell, Hewlett-Packard Enterprise, NetApp and Pure Storage among its principal infrastructure competitors.
    IBM Form 10-K for 2025 - Item 1 business, competitors and strategic partners, Item 1A risk factors, executive officers. — FY2025 · publ. 24 February 2026 · source ↗
  7. ReportedIn the 2022 report Distributed Infrastructure grew 6.6%; in 2025 it fell 1.8 percent.
    IBM 2022 Annual Report (Form 10-K exhibit 13) - zSystems growth, incremental sales to Kyndryl, disposal of the retained Kyndryl stake, Red Hat growth, 2021-2022 segment revenue. — FY2022 · publ. February 2023 · source ↗
  8. ReportedIn the 2022 report Distributed Infrastructure grew 6.6%; in 2025 it fell 1.8 percent.
    IBM 2025 Annual Report (Form 10-K exhibit) - management discussion, consolidated financial statements and notes - management discussion of the Infrastructure and Financing segments: IBM Z, Hybrid Infrastructure and support. — FY2025 · publ. 24 February 2026 · source ↗
Sources
Generated September 28, 2026