International Business Machines Corp. (NYSE:IBM) shares fell sharply premarket Thursday despite a Q1 earnings beat, as slowing growth and rising AI disruption fears weighed on sentiment.

Revenue growth slowed to 9% from 12.2% in the prior quarter, with momentum cooling in the key software segment. Broader weakness across enterprise software—following cautious commentary from ServiceNow, Inc. (NYSE:NOW)—added to the pressure.

Earnings Snapshot

IBM reported quarterly earnings of $1.91 per share, which beat analyst estimates of $1.81 by 5.52%, according to Benzinga Pro data. 

Quarterly revenue of $15.92 billion beat the consensus estimate of $15.62 billion and was up from $14.54 billion in the prior year’s quarter.

Total revenue growth slowed to 9% this quarter, down from 12.2% in the previous quarter. Growth in the critical software segment also showed signs of cooling, which pressured the stock.

IBM’s software division revenue growth slowed to 11.3% in the quarter, down from 14% in the previous quarter. 

IBM expects more than 5% constant currency growth and an increase of approximately $1 billion in year-over-year cash flow in 2026.

Conference Call Takeaways

IBM completed the acquisition ...