The company enters this reporting cycle under pressure to prove that its second-quarter decline was a temporary hiccup rather than a structural issue. During that period, infrastructure revenue plummeted 7% as clients pivoted budgets toward artificial intelligence. CFO Jim Kavanaugh previously indicated that roughly one-third of the delayed mainframe contracts had been salvaged by July, and shareholders are now waiting to see if the remaining backlog successfully translated into revenue.

While the third quarter is expected to provide a temporary boost from those recovered deals, market analysts at Morgan Stanley warn that the outlook for the remainder of the year is more precarious. IBM faces a difficult fourth quarter characterized by a higher revenue bar and intensified competition in the AI software sector. Despite a 19% decline in share price this year, the stock recently saw a modest bump to $240.84, suggesting investors are cautiously optimistic that the worst of the infrastructure cycle has passed.