International Business Machines Corporation (IBM) reported slower growth in its Software business for the second quarter of 2026, with revenues increasing 5% year over year to $7.8 billion but organic revenue growth remaining flat. Notably, revenues from the Transaction Processing segment declined 8%, attributed to a shift in customer capital spending towards infrastructure ahead of expected price hikes.
Despite the challenges, IBM’s Software segment profit rose 9% to $2.5 billion, with a margin of 32.2%. Hybrid Cloud revenues increased 11%, and Red Hat generated significant contributions, while the Data business saw a 19% revenue growth. IBM trades at a forward price-to-sales ratio of 3.09, below the industry average of 4.6.
In comparison, Microsoft Corporation and Oracle Corporation reported strong growth in their respective cloud segments, with Microsoft’s revenues reaching $37.8 billion, marking a 14% year-over-year increase, and Oracle’s cloud revenues surging 47% to $9.9 billion.
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