IBM shares turn lower as company beats but opts to maintain guidance

ibm shares fell 6% after hours on wednesday, even though the company beat first-quarter earnings and revenue estimates. adjusted earnings per share came in at $1.91 versus the expected $1.81, while revenue of $15.92 billion topped the $15.62 billion consensus. revenue grew 9% year over year. the drop came as the company maintained its full-year guidance for 2026, which calls for over 5% revenue growth and a $1 billion increase in free cash flow. software revenue grew 11% to $7.05 billion, while infrastructure revenue jumped 15% to $3.33 billion, driven by a 51% surge in z mainframe hardware sales. the stock is down about 15% for the year, underperforming the s&p 500's 4% gain. it had dropped 13% in february after ai company anthropic suggested ai could modernize cobol code, which runs on ibm mainframes. ibm recently closed its $11 billion acquisition of confluent and now expects its operating pre-tax margin to expand by about 1%.