International Business Machines Corporation IBM is scheduled to report second-quarter 2026 earnings after the closing bell on July 22. In the to-be-reported quarter, the company is likely to have recorded higher revenues from the Consulting segment, backed by rising demand for technology consulting and business transformation services.
Factors at Play
The Consulting segment comprises Strategy and Technology (previously reported as Business Transformation and Technology Consulting) and Intelligent Operations (previously reported as Application Operations). It provides consulting and application management services that offer value and innovation to clients by leveraging industry, technology and business strategy and process know-how.
During the to-be-reported quarter, IBM partnered with Google Cloud to help businesses adopt AI faster and modernize their technology systems. The deal creates a new Google Cloud Practice within IBM Consulting, combining IBM’s industry expertise and AI-powered IBM Consulting Advantage platform with Google Cloud’s Gemini Enterprise AI platform. The collaboration strengthens the company’s expertise in cybersecurity, data management and cloud infrastructure. By integrating Google Cloud’s Gemini AI capabilities with its watsonx platform and using technologies such as Red Hat OpenShift, HashiCorp, Apptio, BigQuery and Confluent, IBM aims to help businesses improve automation, gain deeper data insights and enhance operational efficiency. These are likely to have generated additional revenues for the Consulting segment.
In the second quarter, the company launched IBM Autonomous Security, a multi-agent-powered service with interoperable, vendor-agnostic digital workers that operate across an organization's entire security operations for coordinated decision-making, response and intelligence at machine speed. This has helped business enterprises reduce operational friction and improve resiliency while strengthening compliance outcomes.
Leveraging coordinated AI agents, IBM Autonomous Security helps to analyze potential exploit paths to enforce security policies across the applicable security tools and contain threats with minimal human intervention. Offering deep visibility into security gaps, policy weaknesses and AI-specific exposures, it helps to reduce exposure windows and accelerate containment of high-velocity attacks. This will help to provide a holistic and integrative threat management approach to help security analysts better comprehend critical threats. In addition, it will reduce manual investigations and operational tasks with auto-recommend actions based on the historical patterns of analyzed activity and pre-set confidence levels. This, in turn, will help to effectively mitigate multi-dimensional cyber threats that have become rampant over time.
Overall Expectations
The Zacks Consensus Estimate for Consulting revenues is pegged at $5.4 billion, indicating an improvement from $5.31 billion in the year-ago quarter.
The Zacks Consensus Estimate for total revenues for the company is pegged at $17.59 billion. It generated revenues of $16.98 billion in the prior-year quarter. The consensus mark for earnings is currently pegged at $3.00 per share, indicating growth from $2.8 in the year-earlier quarter.
Earnings Whispers
Our proven model does not conclusively 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 -0.76% with a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
International Business Machines Corporation Price and EPS Surprise
International Business Machines Corporation price-eps-surprise | International Business Machines Corporation Quote
Stocks to Consider
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:
Pinterest, Inc. PINS is set to release quarterly numbers on Aug. 4. It has an Earnings ESP of +1.65% and carries a Zacks Rank #3.
The Earnings ESP for Arista Networks, Inc. ANET is +0.84% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Aug. 4.
The Earnings ESP for Silicon Motion Technology Corporation SIMO is +7.68% and it sports a Zacks Rank of 1. The company is scheduled to report quarterly numbers on July 29.
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This article originally published on Zacks Investment Research (zacks.com).