IBM Doubles Down on Quantum After a Rough Quarter Sinks Its Stock

IBM used a disappointing quarter to restate its quantum ambitions rather than trim them. In a letter to investors reporting weak preliminary second-quarter results, CEO Arvind Krishna reaffirmed the company’s plan to spend more than $10 billion on quantum over five years and to build a large-scale fault-tolerant quantum computer by 2029. The reassurance came as IBM’s stock fell as much as 25%.

Weak earnings didn’t change IBM’s quantum roadmap

According to the July 14 press release, the preliminary numbers were soft. Revenue rose 1% to $17.2 billion, but infrastructure revenue dropped 7%, gross margin narrowed, and GAAP earnings per share slipped 2% to $2.27. Krishna pinned much of the miss on the Z mainframe business and on execution, saying some large customer deals didn’t close on schedule and that buyers shifted spending toward supply-constrained hardware late in the quarter.

These are preliminary figures. IBM said full second-quarter results and updated guidance will come at its July 22 earnings call, so the picture could firm up or change.

Why IBM is still betting big on quantum

The quantum message was the point of the letter for a company trying to steady rattled investors. Krishna wrote that quantum computing is “no longer decades away, it is upon us,” which is worth reading as a CEO’s framing rather than a settled fact.

He tied the commitment to specifics. IBM’s $10 billion, five-year plan covers research, manufacturing, and acquisitions, and he pointed to Anderon, a proposed quantum wafer foundry that would draw up to $1 billion in CHIPS incentives alongside $1 billion of IBM’s own money. The 2029 fault-tolerance target, the point at which a machine can correct its own errors well enough to tackle useful problems, stayed in place.

The through-line is that IBM is presenting quantum as a long-term growth business even as its core software and infrastructure operations struggle in the near term. Krishna said the company is moving to improve execution. Whether the quantum spending holds through a weaker financial stretch is the thing to watch.