⚠ Comparisons Against a 67% QuarterModerate threat

IBM (IBM) — threat to the moat

Every quarter until the next launch is measured against z17's record start, and the market has already shown it will not wait.

The arithmetic of the cycle is now working against IBM. IBM Z revenue rose 67% in the fourth quarter of 20251 and 51% in the first quarter of 20262. Every quarter until the next launch is compared with those.

IBM Z revenue growth by quarter (%)+67%Q4 2025+51%Q1 2026-42.0%Q2 2026IBM Q4 2025 and Q1 2026 releases, Form 10-Q Q2 2026
From the best quarter to the worst in six months.

The share price has shown how little patience the market has for that arithmetic. IBM had warned in April that it would be lapping the z17 launch3, and still the stock fell 25% on 14 July 2026 when the second quarter came in below plan4.

The risk for the moat is subtle. A trough is not a threat by itself, but a long trough is costly because IBM's software, financing and support revenue lean on the same machine. Financing's segment profit fell from $179 million to $108 million in the second quarter5, partly because the intercompany sales of returned leased machines that lifted it in 2025 reflect "IBM Z product cycle dynamics"6.

IBM's own guidance history shows how the trough was misjudged. In January the company expected more than 5% revenue growth at constant currency for 20267; in April it reaffirmed that8; in July it cut the range to four to five percent9. The cut was small in percentage terms. It came, however, after a quarter in which the mainframe fell nearly twice as far as IBM had planned for, and the second half still has to absorb the comparisons with z17's best quarters.

The measure here is the size of the Infrastructure decline for the year. IBM's own July guidance cut total growth to four to five percent at constant currency10; if the Infrastructure segment falls more than 10% for 2026, the trough is deeper than the company planned for.

References
  1. ReportedIBM Z revenue rose 67% in the fourth quarter of 2025 and 51% in the first quarter of 2026.
    IBM fourth-quarter and full-year 2025 results release, Form 8-K exhibit 99.1 - IBM Z growth, generative AI book of business and 2026 expectations. — FY2025 · publ. 28 January 2026 · source ↗
  2. ReportedIBM Z revenue rose 67% in the fourth quarter of 2025 and 51% in the first quarter of 2026.
    IBM first-quarter 2026 results release, Form 8-K exhibit 99.1 - IBM Z growth and the 31st consecutive annual dividend increase. — Q1 2026 · publ. 22 April 2026 · source ↗
  3. ReportedIBM had warned in April that it would be lapping the z17 launch, and still the stock fell 25% on 14 July 2026 when the second quarter came in below plan.
    Arvind Krishna's letter to IBM investors with preliminary second-quarter 2026 results, Form 8-K exhibit 99.1. — Q2 2026 · publ. 14 July 2026 · source ↗
  4. ReportedIBM had warned in April that it would be lapping the z17 launch, and still the stock fell 25% on 14 July 2026 when the second quarter came in below plan.
    CNBC, IBM stock craters 25%, the worst day on record, after company issues second-quarter earnings warning. — July 2026 · publ. 14 July 2026 · source ↗
  5. ReportedFinancing's segment profit fell from $179 million to $108 million in the second quarter, partly because the intercompany sales of returned leased machines that lifted it in 2025 reflect "IBM Z product cycle dynamics".
    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. ReportedFinancing's segment profit fell from $179 million to $108 million in the second quarter, partly because the intercompany sales of returned leased machines that lifted it in 2025 reflect "IBM Z product cycle dynamics".
    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 ↗
  7. ReportedIn January the company expected more than 5% revenue growth at constant currency for 2026; in April it reaffirmed that; in July it cut the range to four to five percent.
    IBM fourth-quarter and full-year 2025 results release, Form 8-K exhibit 99.1 - IBM Z growth, generative AI book of business and 2026 expectations. — FY2025 · publ. 28 January 2026 · source ↗
  8. ReportedIn January the company expected more than 5% revenue growth at constant currency for 2026; in April it reaffirmed that; in July it cut the range to four to five percent.
    IBM first-quarter 2026 results release, Form 8-K exhibit 99.1 - IBM Z growth and the 31st consecutive annual dividend increase. — Q1 2026 · publ. 22 April 2026 · source ↗
  9. ReportedIn January the company expected more than 5% revenue growth at constant currency for 2026; in April it reaffirmed that; in July it cut the range to four to five percent.
    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 ↗
  10. ReportedIBM's own July guidance cut total growth to four to five percent at constant currency; if the Infrastructure segment falls more than 10% for 2026, the trough is deeper than the company planned for.
    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 ↗
Sources
Generated September 28, 2026