IBM Earnings in Focus: Can AI momentum revive investor confidence?

IBM is set to report its second-quarter earnings on Wednesday, with investors closely watching whether the technology giant can restore confidence after one of the sharpest stock declines in its history. The results are expected to offer clarity on AI demand, software growth and management's outlook. (Sources: TradingView, Yahoo Finance, Reuters)

IBM shares have steadied around the $210-$215 range after plunging nearly 25% earlier this month following disappointing preliminary results. The dramatic fall erased months of gains and left investors looking for evidence that the company's AI strategy remains intact.

Analysts believe enterprise AI remains IBM's biggest growth opportunity, with demand for Watsonx, hybrid cloud offerings and AI consulting expected to drive long-term expansion. However, investors want proof that AI spending is translating into stronger revenue and margins rather than simply boosting costs.

Consensus estimates point to revenue of roughly $17.2 billion and adjusted earnings per share of about $2.93. Beyond the headline figures, investors will focus on software revenue, consulting performance, infrastructure demand and AI-related bookings to gauge the strength of IBM's core businesses.

The earnings call could determine whether IBM's recent decline was an overreaction or a sign of deeper challenges. A reassuring outlook on AI adoption, enterprise technology spending and revenue growth could help the stock recover, while another weak update may keep pressure on shares.