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It has been about a month since the last earnings report for Seagate (STX). Shares have added about 10.7% in that time frame, outperforming the S&P 500. But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Seagate due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts. Seagate reported fourth-quarter fiscal 2026 non-GAAP earnings of $5.71 per share, beating the Zacks Consensus Estimate of $5.10 and exceeding the high end of management’s guidance of $5 per share (+/- 20 cents). The bottom line also expanded a whopping 121% year over year. Non-GAAP revenues of $3.6 billion surpassed the Zacks Consensus Estimate by 3.9%. Revenues were above the midpoint of guidance, increasing 48% year over year. Robust cloud spending and disciplined operational execution boosted the company's performance. Strong AI-driven demand for cloud storage solutions helped Seagate achieve 34% revenue growth in fiscal 2026 to $12.2 billion. With improving demand visibility, the company expects fiscal 2027 revenue growth to outpace that of fiscal 2026. Strong enterprise OEM demand led to double-digit revenue and exabyte shipment growth in the June quarter. Seagate is expanding HAMR production to meet growing cloud and enterprise storage needs. It shipped 218 exabytes, up 34% year over year, with data centers accounting for 89% of total shipments. Data center exabyte shipments increased 43% year over year and 11% sequentially. Global cloud customers constitute the majority of Seagate's data center revenue and exabyte demand. The company is expanding production of HAMR-based drives, initially targeting cloud customers before broadening adoption across enterprise markets. It is investing in manufacturing capacity and technology to support the transition while maintaining stable output as demand shifts to higher-capacity drives. These efforts are expected to support mid-20% annual nearline exabyte growth over the next few years. Beginning first-quarter fiscal 2026, it reports revenues across two key markets — Data Center, encompassing nearline products and systems sold to cloud, enterprise and VIA customers, and Edge IoT, covering consumer and client-focused segments, including network-attached storage. The data center accounted for 81% of total revenues, at $2.9 billion, representing a 17% sequential increase and 57% year-over-year growth. The edge IoT accounted for the remaining 19% of revenues, at $697 million, up 20% year over year and 14% sequentially, aided by ongoing supply constraints and favorable NAND pricing. Non-GAAP gross profit surged to $1.9 billion, more than doubling year over year and 31% sequentially. Non-GAAP gross margin reached a record 52.7%, rising about 570 basis points (bps) quarter over quarter and roughly 1,480 bps year over year. The gains were driven by disciplined pricing and a favorable product mix, with management expecting these trends to continue amid robust demand. Non-GAAP operating expenses were $293 million, up 2% year over year. Non-GAAP operating profit climbed 39% sequentially to $1.6 billion, with a 44.6% operating margin, highlighting strong execution in pricing, supply management and areal density innovation. Non-GAAP adjusted EBITDA totaled $1.7 billion, up 37% quarter over quarter and 142% year over year. As of July 3, 2026, cash and cash equivalents were $1.7 billion compared with $1.2 billion as of April 3. Long-term debt (including the current portion) was $3.6 billion as of July 3, 2026, compared with $3.9 billion as of April 3. Cash flow from operations during the fiscal fourth quarter was $1.3 billion compared with $1.1 billion in the previous quarter. Free cash flow increased 17% sequentially and 163% year over year to $1.1 billion. Seagate expects further cash flow growth in fiscal 2027, supported by strong demand, operational efficiency and disciplined capital spending. June-quarter capital spending totaled $187 million, bringing fiscal 2026 CapEx to 4.7% of revenue, within its target range of 4-6% of revenue. Seagate continues balancing investment with shareholder returns. The company returned approximately $810 million during fiscal 2026 through quarterly dividends and share repurchases. Additionally, Seagate declared another quarterly dividend of 74 cents per share, payable on Oct. 7, 2026, to shareholders of record on Sept. 24. Seagate's BTO model points to sustained demand for high-capacity nearline drives amid rising AI adoption. The company expects continued revenue and margin growth in the September quarter, backed by the Mozaic rollout and disciplined pricing. Management anticipates fiscal first-quarter revenues of $4.1 billion (+/- $100 million). At the midpoint, this indicates a 56% year-over-year improvement. Non-GAAP earnings are expected to be $7.3 per share (+/- 20 cents). For the quarter, non-GAAP operating expenses are expected to be around $300 million. At the midpoint of revenue guidance, non-GAAP operating margin is projected to be roughly 50%. The guidance incorporates expected dilution from Exchangeable Senior Notes due 2028, minimal anticipated impact from tariffs and minimal expected impact from current Middle East geopolitical conflicts. This outlook suggests that management expects cloud spending and AI-driven storage demand to remain healthy. Since the earnings release, investors have witnessed a upward trend in fresh estimates. The consensus estimate has shifted 30.61% due to these changes. At this time, Seagate has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. Following the exact same course, the stock has a score of F on the value side, putting it in the lowest quintile for value investors. Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in. Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Seagate has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months. Seagate belongs to the Zacks Computer - Integrated Systems industry. Another stock from the same industry, IBM (IBM), has gained 1.5% over the past month. More than a month has passed since the company reported results for the quarter ended June 2026. IBM reported revenues of $17.16 billion in the last reported quarter, representing a year-over-year change of +1.1%. EPS of $2.93 for the same period compares with $2.80 a year ago. For the current quarter, IBM is expected to post earnings of $2.90 per share, indicating a change of +9.4% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days. IBM has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Seagate Technology Holdings PLC (STX) : Free Stock Analysis Report International Business Machines Corporation (IBM) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Nvidia risks a 20% drop to $165 if it misses earnings, with virtually no margin for error built into its current stock price. Customers Microsoft and Meta are building competing AI chips, threatening the near-monopoly behind Nvidia's $91 billion quarterly revenue forecast. Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Microsoft didn't make the cut. Grab the names FREE today. How low can a stock go if it misses earnings? Well, look at its 52-week low. If that happens to Nvidia (NASDAQ: NVDA), the stock would drop 20% to $165, where it was in late March. That was when AI suddenly fell out of vogue amid worries it wasn't the greatest invention of all time. Oracle(NYSE: ORCL) missed earnings, dropping more than half, but it is considered the weakest of the large tech companies. IBM (NYSE: IBM) fell 20% on a miss, but it is a third-tier company. Before Meta (NASDAQ: META) posted poor results, it fell 20% and is down over 25% for the year. More broadly, the big question is when investors will sell off the AI sector. Many market experts say it is inevitable. The stocks of the core companies that lead the sector have risen too far too fast. Nvidia said to expect revenue of $91 billion for the quarter it will report this week. The assumption today is that, as nearly the only game in town for high-end AI chips, the tide of demand will drive it higher, no matter what. Even if the company hits the $91 billion mark, much of the focus will be on the guidance for the current quarter. Nvidia’s forecast numbers are very exact. Usually it says its forecast will be within a range of 2% up or down from its forecast number. Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Microsoft didn't make the cut. Grab the names FREE today. What sinks Nvidia’s boat? At the top of the list is slowing data center growth, which could be driven by protests that have slowed construction. The Information puts that figure at 500 today, and probably growing. But what should worry investors more is the jump in corporate statements questioning products from the biggest AI players. Some of these customer companies have throttled back their investments. And Nvidia’s own customers have started to compete against it. Yahoo recently reported, “The list of companies creating technologies that could reduce the industry's reliance on Nvidia might be longer than a shopping list for making a traditional mole poblano.” Among these were Microsoft (NASDAQ: MSFT) and Meta. Nvidia's upcoming earnings will show whether it has reached the point of even a single weakness. Its stock trades as if it has not. This makes the margin of error on its numbers very, very small. Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Microsoft didn't make the cut. Grab the names FREE today. Contact [email protected] for any questions or corrections.

It has been about a month since the last earnings report for IBM (IBM). Shares have added about 13.1% in that time frame, outperforming the S&P 500. Will the recent positive trend continue leading up to its next earnings release, or is IBM due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the latest earnings report in order to get a better handle on the important drivers. IBM Q2 Earnings Meet Estimates, Revenue Misses on Deal DelaysIBM reported relatively modest second-quarter 2026 results with adjusted earnings of $2.93 per share, up 5% year over year and in line with the Zacks Consensus Estimate. Revenues rose 1.1% to $17.16 billion but missed the consensus mark of $17.32 billion by 0.9%. The top-line miss reflected delayed large, capital-expenditure-sensitive software transactions and weaker IBM Z revenues. Software annual recurring revenue reached $24.6 billion, up 8% year over year, supported by continued strength in Red Hat, HashiCorp and Confluent. Software Growth Slows on Transaction TimingSoftware revenues increased 5.1% year over year to $7.76 billion. Hybrid Cloud revenues rose 11%, while Data advanced 19%, or 18% at constant currency. Automation grew 4%, or 3% at constant currency.Transaction Processing revenues fell 8%, or 9% at constant currency, as clients redirected spending toward servers, storage and memory amid supply constraints and expected price increases. Management observed that several large deals did not close on schedule, accounting for most of the quarterly shortfall. About 80% of annual software revenues are recurring, comprising subscription, consumption and support streams. This portion delivered healthy growth, while OpenShift annual recurring revenue reached $2.2 billion.HashiCorp posted another record-bookings quarter, while Confluent remained on track after its first full quarter since the acquisition. Software segment profit rose 9% to $2.50 billion, lifting margin 110 basis points (bps) to 32.2%.Consulting Gains from AI Transformation DemandConsulting revenues were nearly flat at $5.33 billion, up 1% in constant currency. Strategy and Technology and Intelligent Operations each increased 1% on a constant-currency basis. Signings grew 6% to $5.0 billion, marking a second consecutive quarter of growth. Generative AI represented about 50% of signings and more than 30% of backlog. Segment profit increased 15.1% to $647 million, while margin expanded 160 bps to 12.1%. Infrastructure Segment Mix WeighsInfrastructure revenues declined 7.4% to $3.84 billion. Hybrid Infrastructure fell 10%, reflecting a 42% plunge in IBM Z revenues, while Infrastructure Support slipped 1%. Distributed Infrastructure surged 37% and delivered its strongest quarterly growth on record. Power and Storage exited the quarter with nearly $500 million of backlog. Infrastructure segment profit declined 13% to $835 million, and margin contracted 150 bps to 21.8%.IBM Expands Operating Profit Despite Gross Margin PressureNon-GAAP gross profit was $10.19 billion, essentially flat year over year, while non-GAAP gross margin declined 70 bps to 59.4%. The pressure mainly reflected the revenue shortfall and business mix.Non-GAAP pre-tax income rose 3% to $3.29 billion, with margin expanding 30 bps to 19.2%. Adjusted EBITDA increased 2% to $4.8 billion, and margin improved about 20 bps to 27.8%, aided by productivity initiatives.IBM Maintains Cash Flow DisciplineIBM generated $2.6 billion in operating cash flow during the quarter, up $0.9 billion year over year. Free cash flow was $2.5 billion, down $0.3 billion, while first-half free cash flow remained flat at $4.8 billion.The company ended June with $8.20 billion in cash, restricted cash and marketable securities. Total debt was $62 billion, including $13 billion of IBM Financing debt. IBM returned $1.59 billion to shareholders through quarterly dividends. IBM Trims Revenue View but Raises Margin TargetFor 2026, IBM now expects constant-currency revenue growth of 4% to 5%, down from its prior expectation of more than 5%. The company continues to expect free cash flow to increase by about $1 billion year over year.Software growth is projected at 6% to 8%, while Infrastructure is expected to grow in the low single digits. Consulting growth is forecast to accelerate to the low-to-mid-single-digit range. IBM now expects 100 bps of operating pre-tax margin expansion for the year. It turns out, estimates review have trended upward during the past month. At this time, IBM has a average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a score of C on the value side, putting it in the middle 20% for this investment strategy. Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in. Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Interestingly, IBM has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report International Business Machines Corporation (IBM) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Kyndryl’s second quarter results saw a negative market reaction, as sales declined and missed Wall Street’s revenue expectations. Management attributed the revenue shortfall to ongoing headwinds in its legacy focus accounts and customers increasingly procuring IBM hardware and software directly. CEO Martin Schroeter cited positive momentum in Kyndryl Consult and hyperscaler partnerships, but acknowledged that lengthening sales cycles and workforce rebalancing charges weighed on profitability. He stated, “AI, modernization and cyber preparedness remain important priorities for enterprises,” but also noted that “there is more work ahead.” Is now the time to buy KD? Find out in our full research report (it’s free). Revenue: $3.62 billion vs analyst estimates of $3.64 billion (3.3% year-on-year decline, 0.7% miss) Adjusted EPS: -$0.12 vs analyst estimates of -$0.17 (29.4% beat) Adjusted EBITDA: $512 million vs analyst estimates of $460.6 million (14.2% margin, 11.2% beat) Operating Margin: -1.2%, down from 3.3% in the same quarter last year Market Capitalization: $2.91 billion While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. Yu Lee (Guggenheim Securities) asked about the assumptions behind the Consult segment’s growth and sales cycle duration. CEO Martin Schroeter explained that high single to low double-digit growth is expected, with robust signings and consistent sales cycles. Kevin Krishnaratne (Scotiabank) inquired about headwinds in European markets and evolving AI sovereignty concerns. Schroeter said trends remain consistent with guidance, citing complexity and regulatory issues but not longer deal cycles. Tien-Tsin Huang (JPMorgan) focused on workforce reskilling and redeployment amid AI-driven transformation. Schroeter detailed how automation frees staff for higher-value work, while Chugh emphasized success in reskilling and managing costs. Bradley Clark (BMO Capital Markets) asked about Kyndryl’s advantage in winning new logos and pricing dynamics. Schroeter highlighted the company’s Agentic AI Framework, Kyndryl Bridge, and industry expertise as differentiators, especially in consulting. Spencer Anson (Susquehanna) queried the scale and opportunity in mainframe modernization and its impact on the IBM relationship. Schroeter stressed Kyndryl’s market-leading expertise and the continued importance of mainframe services for customers. In the coming quarters, the StockStory team will be watching (1) sustained revenue growth in Kyndryl Consult and hyperscaler partnerships, (2) evidence that workforce rebalancing and automation initiatives deliver the expected improvement in margins, and (3) further reduction in the impact of legacy focus account headwinds. The pace of new contract signings and execution against AI-driven modernization goals will remain critical markers. Kyndryl currently trades at $13.47, down from $14.69 just before the earnings. Is there an opportunity in the stock? See for yourself in our full research report (it’s free for active Edge members). ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively. Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.

Interested in Kyndryl Holdings, Inc.? Here are five stocks we like better. Revenue and profitability declined: Kyndryl’s fiscal Q1 revenue fell 3% to $3.6 billion, while adjusted EBITDA was $512 million and adjusted pre-tax income was a $37 million loss. Workforce rebalancing charges of $152 million significantly reduced margins. Growth areas gained momentum: U.S. revenue rose 5%, Kyndryl Consult revenue increased 14%, and hyperscaler-related revenue grew 48% to more than $530 million for the quarter, supported by demand for AI, cloud modernization and cybersecurity services. Outlook reaffirmed despite IBM headwinds: Kyndryl maintained its fiscal 2027 targets for flat-to-2% constant-currency revenue decline, $600 million-$700 million in adjusted pre-tax income and $400 million-$500 million in free cash flow. Management expects IBM-related revenue pressure to continue, while workforce actions are projected to generate $400 million-$500 million in annualized savings by fiscal 2028. MarketBeat Week in Review – 02/17 - 02/21 Kyndryl (NYSE:KD) reported fiscal first-quarter revenue of $3.6 billion, down 3% from a year earlier on both a reported and constant-currency basis, while maintaining its full-year outlook as it pursues growth in consulting, hyperscaler partnerships and AI-led modernization services. For the quarter ended June 30, the company generated adjusted EBITDA of $512 million and an adjusted pre-tax loss of $37 million. Interim Chief Financial Officer Harsh Chugh said earnings and margin declined year over year primarily because of $152 million in workforce rebalancing charges, which reduced adjusted pre-tax income margin by more than four points. → Sandisk Just Delivered a Blowout Quarter—Here's Why the Stock Is Falling Kyndryl Soars on AI, Cybersecurity Growth—What’s Next? Kyndryl continued to see growth in the U.S., where revenue increased 5% for a second consecutive quarter. The company exited the period with $14.2 billion in trailing 12-month signings, including $3.9 billion signed during the quarter. Chairman and Chief Executive Officer Martin Schroeter said Kyndryl Consult and hyperscaler-related activities were helping offset revenue pressure from focus accounts, extended sales cycles and customers purchasing certain IBM hardware and software directly from IBM. → 4 Oil and Gas ETF Plays as Prices Stay Sky-High MarketBeat Week in Review – 9/25 - 9/29 Kyndryl Consult revenue rose 14% over the last 12 months, while hyperscaler-related revenue streams increased 48%. In the first quarter, Kyndryl generated more than $530 million in hyperscaler-related revenue, bringing the trailing 12-month total to $2 billion. Schroeter said customers are increasingly seeking help with AI deployment, modernization of hybrid technology estates, cybersecurity and data-residency requirements. He said the company has expanded its AWS alliance to support enterprise adoption of agentic AI and broadened work with Microsoft Azure around cloud architectures and operational requirements. Kyndryl also cited partnerships with Broadcom, Dell, Hewlett Packard Enterprise and Red Hat. → No Hangover: Revisiting Microsoft One Week After Earnings The company signed 40 deals valued at more than $50 million during the past 12 months, including 10 in the first quarter. About 30% of the value of those larger deals came from scope expansions or new customers, compared with 15% in fiscal 2025, according to Schroeter. Kyndryl Consult signings rose 50% in the first quarter, Schroeter said during the question-and-answer session. New scope and new-logo business represented 30% of large-deal signings, management said. Average projected gross margin on signings over the last 12 months was 25%, according to Chugh. Chugh said Kyndryl’s changing commercial relationship with IBM has created a three-point adverse effect on constant-currency revenue performance, alongside earlier effects from the company’s focus-account initiative. Customers have increasingly chosen to procure some IBM hardware and software directly from IBM while continuing to rely on Kyndryl for services. Chugh said the shift reduces the size of signings and future revenue but does not affect the service scope or margin profile of Kyndryl’s work. Kyndryl’s spending with IBM was less than $2 billion over the past 12 months, down from an annualized run rate of nearly $4 billion when Kyndryl was spun off. Management said it expects a similar IBM-related revenue headwind through the remainder of fiscal 2027. Schroeter said the company continues to work closely with IBM, particularly in helping customers modernize technology environments that may include mainframes, private cloud, public cloud and software-as-a-service applications. He said Kyndryl has between 8,000 and 9,000 mainframe experts and runs more than half of the world’s outsourced mainframes. Kyndryl is taking workforce rebalancing actions in response to lower-than-normal voluntary attrition and SG&A costs. Savings from those actions are expected to begin in the second half of fiscal 2027. The company expects about $200 million in workforce rebalancing charges during the year, offset by a similar amount of savings, with annualized savings of $400 million to $500 million expected in fiscal 2028. Schroeter said Kyndryl is using automation and AI through its Kyndryl Bridge platform and Advanced Delivery initiative to improve productivity and redeploy workers into higher-value roles. He said the company has about 1,800 agents in its infrastructure operations and has redeployed tens of thousands of employees since beginning its automation efforts. First-quarter free cash flow was an outflow of $401 million, reflecting seasonal working-capital timing, higher payments associated with multiyear renewals and software subscriptions, and lower billing and collections. Kyndryl ended the quarter with $2.1 billion in cash and a net leverage ratio of 0.8 times. It repurchased 5 million shares for $64 million during the quarter. The company reaffirmed its fiscal 2027 outlook for adjusted pre-tax income of $600 million to $700 million, free cash flow of $400 million to $500 million, and constant-currency revenue ranging from flat to down 2%. Management expects revenue trends to improve each quarter and anticipates stronger revenue in the second half than the first half. For fiscal 2028, Kyndryl continues to target more than $1.2 billion in adjusted pre-tax income and $1 billion in free cash flow, based on low-single-digit constant-currency revenue growth. Schroeter also said Chugh has decided to retire after serving as interim CFO for the past six months. Chugh will remain an executive adviser to Schroeter and the leadership team. Ellen Johnson, previously announced as the incoming CFO, was scheduled to begin in the role on Aug. 6. Kyndryl (NYSE: KD) is a global managed infrastructure services provider formed in November 2021 through the spin-off of IBM's Managed Infrastructure Services business. The company designs, builds, manages and modernizes critical information technology systems for enterprises worldwide. Kyndryl's core offerings include cloud migration and management, network and edge computing solutions, digital workplace services and IT resiliency and security capabilities. With a workforce of approximately 90,000 professionals and operations in more than 60 countries, Kyndryl serves clients across a broad range of industries, including financial services, telecommunications, healthcare, manufacturing and retail. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Kyndryl Q1 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

IBM has launched a public preview of Apptio AI Value & ROI, a new set of capabilities intended to give technology and finance executives, governance teams, and business leaders a unified view of AI spending and its relationship to business results. Apptio, an IBM company, announced the development as part of efforts to address the challenges organisations face in demonstrating value from AI investment. The Apptio AI Value & ROI platform enables tracking of AI projects across key business areas including revenue, speed, costs, productivity, and risk. By centralising information on AI initiatives, the tool aims to help enterprises link their AI expenditures, including token costs, with measurable outcomes. Integration with IBM Cloudability provides visibility over token spend, while Apptio AI Value & ROI connects this expenditure to specific business metrics. IBM Apptio vice president Bill Lobig said: “AI is facing a cost crisis, and organisations are under growing pressure to demonstrate business value. “With Apptio, clients can address waste — with one client seeing a 50% reduction in costs, allowing them to unlock funding for new AI initiatives that accelerate innovation.” The demand for clearer measurement comes as industry research cited by IBM suggests that most finance leaders struggle to quantify returns on AI deployments. Key features of the new offering include the ability to tie individual AI programmes to selected business outcomes and performance indicators, such as cost avoidance, cycle time, conversion rate, or incident volumes. It also allows organisations to monitor progress from baseline through to realised results. The system supports inputs from various inventory and metric sources, and is integrated with other IBM Apptio and Cloudability tools to incorporate technology, token spend, usage, labour and related costs for a comprehensive view. Apptio AI Value & ROI is available in public preview for clients using IBM Apptio Costing Standard or IBM Apptio AI TCO & Usage products, with wider general availability planned for the third quarter of 2026. Last month, IBM reached an agreement to acquire HRL Laboratories, a research and development organisation based in the US and jointly owned by Boeing and General Motors. The move is intended to strengthen IBM’s activities in quantum technologies. After the transaction is completed, Boeing and General Motors will maintain partnerships with IBM to support quantum applications and advanced technology development. "IBM previews Apptio AI Value & ROI to track AI spend and results" was originally created and published by Verdict, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Performance is increasingly driven by higher-margin post-spin signings, with 12-month signings reaching $14.2 billion and total signings exceeding revenue for the last six months. The Kyndryl Consult segment grew 14% over the last 12 months, reflecting broad enterprise demand for designing and scaling Agentic AI across business workflows and modernizing complex hybrid IT environments. Hyperscaler-related revenue streams grew 48% year-over-year, partially offsetting headwinds from legacy focus accounts and shifts in how customers procure IBM hardware and software. Management is embedding AI-powered automation via Kyndryl Bridge to drive productivity, which has generated approximately $1 billion in cumulative savings since the company's spin-off. Strategic positioning is centered on the 'run and transform' approach, helping customers manage mission-critical infrastructure while simultaneously deploying next-generation technologies. The company is executing workforce rebalancing to address lower-than-normal voluntary attrition and streamline SG&A costs, with savings expected to materialize in the second half of the fiscal year. Management reaffirmed fiscal 2027 adjusted pretax income guidance of $600 million to $700 million, assuming revenue remains flat to down 2% in constant currency. Fiscal 2028 targets include delivering more than $1.2 billion in adjusted pretax income and $1 billion in free cash flow, achievable on low single-digit constant currency revenue growth. Workforce rebalancing actions are projected to yield annualized savings between $400 million and $500 million starting in fiscal 2028. Revenue trends are expected to improve each quarter, with second-half fiscal 2027 performance projected to be stronger than the first half based on recent signing momentum. Guidance assumes continued top-line headwinds as customers increasingly procure certain IBM hardware and software directly from IBM rather than through Kyndryl. Incurred $152 million in workforce rebalancing charges during Q1, which had a more than 4-point negative impact on adjusted pretax income margin. The evolving IBM relationship resulted in a 3-point adverse impact on constant currency revenue performance, though management notes this has limited impact on earnings. Free cash flow for Q1 was a $401 million outflow, attributed to seasonal working capital timing and higher payments for multiyear renewals and software subscriptions. Net leverage remains low at 0.8x, with the company repurchasing 5 million shares for $64 million during the quarter as part of its capital allocation strategy. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management confirmed Consult is on track with high single to low-double digit growth expectations, supported by 50% signings growth in Q1. July signings remained strong, providing confidence in the full-year revenue trajectory despite a tough year-over-year comparison expected in Q2. Weakness in Europe (down 8% constant currency) was attributed to complex sovereign data discussions and deliberate decision-making cycles. Management clarified that these trends were already contemplated in the annual guidance and do not signal a fundamental shift in deal cycle duration. Kyndryl is using 'Agentic AI' internally with 1,800 agents to automate infrastructure tasks, allowing for the redeployment of tens of thousands of employees into higher-value roles. The business model focuses on outcome-based payments, where automation improvements allow Kyndryl to retain a portion of the generated efficiency savings. New logos and scope expansions now represent 30% of large deal value, up from 15% in fiscal 2025, driven by the proprietary Kyndryl Agentic Framework and Bridge platform. Pricing discipline remains a priority, with signings maintaining projected gross margins in the mid-20s and pretax margins in the high single digits.

This article first appeared on GuruFocus. Release Date: August 05, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Kyndryl Holdings Inc (NYSE:KD) delivered 5% revenue growth in the US for the second consecutive quarter, driven by its AI-led modernization approach. Kyndryl Consult revenue grew 14% year-over-year, and hyperscaler-related revenue streams grew 48% over the last 12 months. Total signings exceeded revenue over the last six months, with 40 deals over $50 million signed in the past year, 30% of which came from scope expansions or new logos. The company signed contracts with an average projected gross margin of 25% and high single-digit pre-tax margins, improving the quality of its revenue backlog. Kyndryl Holdings Inc (NYSE:KD) reaffirmed its fiscal 2028 targets of over $1.2 billion in adjusted pre-tax income and $1 billion in free cash flow, achievable on low single-digit revenue growth. The company is embedding AI and automation through its Kindle Bridge platform, with over 1,800 agents in infrastructure, generating significant productivity savings and improving service quality. Kyndryl Holdings Inc (NYSE:KD) reported a 3% year-over-year revenue decline in Q1, with an adjusted pre-tax loss of $37 million due to $152 million in workforce rebalancing charges. The evolving relationship with IBM, where customers procure hardware and software directly, is creating a persistent headwind, reducing signings and revenue growth. The company faces lengthening sales cycles and delayed customer decisions, particularly in Europe, where sovereignty concerns and market complexity are impacting performance. Free cash flow was a $401 million outflow in Q1, driven by higher payments for renewals and lower billing and collections, though this was anticipated for the season. Kyndryl Holdings Inc (NYSE:KD) expects the IBM-related headwind to continue throughout fiscal 2027, with revenue projected to be flat to down 2% in constant currency. The company incurred significant workforce rebalancing charges, with approximately $200 million expected for the full year, impacting near-term profitability. Warning! GuruFocus has detected 3 Warning Signs with KD. Is KD fairly valued? Test your thesis with our free DCF calculator. Q: Can you help us think through what's contemplated in the fiscal '27 outlook across the moving pieces, specifically the assumed consult growth pace, the level of signings conversion assumed and any embedded assumptions around sales cycle duration, where do you see the biggest sources of upside and downside relative to the flat to down to constant currency revenue outlook range? A: Martin Schroeder (CEO): We started the year guiding consult to high single to low double-digit growth, and we just printed 10%, so we feel very good about that start. We also feel good about Q1 signings, with 50% growth in consult signings, and we had a good July in signings as well. On sales cycles, customers are making long-term decisions on mission-critical elements, and the complexity of technology is ever-present. We are not seeing dramatically different sales cycles relative to the role we play in long-term commitments. Harsh adds that we continue to see momentum in hyperscalers, and the higher value elements in our signingsnew scope and new logoscontinued at a pace of 30% compared to 15% in fiscal 2025, with a good pipeline mix looking forward. Q: There's been a lot of talk over the years about mainframe modernization and COBOL modernization, can you just talk to the opportunities you see there, how it might affect your business and any impact to the relationship with IBM? A: Martin Schroeder (CEO): Mainframe modernization is real, and we have more scale than anybody else, running more than half the world's outsourced mainframes. We have 8,000-9,000 deep mainframe experts, and our scale allows us to invest in the next generation of talent. Modernization is the top of the list for customers to use new technologies like AI, stay ahead of security threats, and keep up with regulatory changes. Our relationship with IBM is quite good and continues to evolve. We are lined up with IBM to help customers get to the right answer, which is quite often a mainframe. Harsh adds that customers will decide where their IT environment goes based on business needs, and we must be relevant across the whole ecosystempublic cloud, private cloud, and mainframeto follow their wallet share. Q: I want to switch to the principal markets, maybe Europe is down 8%, constant currency 7% last quarter. Was that ahead or below your expectations, and how do you see trends out of Europe evolving into Q2, Q3? A: Martin Schroeder (CEO): It is all consistent with what we assumed as we started the year and still supports our guidance for the full year. The trends in deal closings and cycle times are not a lot different. Europe sometimes has a sovereignty discussion, but by and large, it's the complexity of the environments customers are dealing with. They know they need to commit long-term to run their infrastructure, but also know that in 3 months, someone can make an announcement that changes the world of AI again. Harsh adds that this is consistent with what we discussed in the last couple of quarters regarding the UK and the European segment of strategic markets, and it was as anticipated, not impacting our view for the full year. Q: Just thinking about the workforce in general, you've got robust signings and savings on the way from workforce rebalancing. Can you comment on resourcing or headcount, reskilling, and lining up the workforce to deliver on the AI-led modernization and value-added services work? A: Martin Schroeder (CEO): We have about 1,800 agents in the infrastructure helping us get to solutions faster, reduce impact events, and automate things. This allows us to free up people and reposition them in higher value roles. We've redeployed tens of thousands of people since we started this process. Our business model is paid on outcome, so as long as we deliver on uptime, resiliency, and security, we get to keep a piece of the savings. We've generated about $1 billion in cumulative savings since the spinoff using machine data, Kindle Bridge, and automation, all while our net promoter scores continue to improve. Harsh adds that the forward-deployed engineers and insights we bring are helping us win against competition, and we have a great success rate in reskilling and redeployment, with workforce management allowing us to manage stranded costs holistically. Q: In this competitive environment, how is Kyndryl approaching new logos, and what do you think your advantages lie as you win new customers, particularly in the consult business? Can you also comment on any pricing dynamics you're experiencing? A: Martin Schroeder (CEO): We've added hundreds and hundreds of new customers. Our most recent wins are tied to our leadership with the Kyndryl Agentic framework, which provides the architecture and delivery framework to industrialize the design, integration, and operations of customer infrastructure. This is supported by Kyndryl Bridge, our control plane that connects tools, workflows, telemetry, and automation, providing customers with 16-18 million insights a month and over 200 million automations a month. We've been aggressive in investing in Kyndryl Consult to get industry expertise and talent. These are complex infrastructures, and customers need someone to integrate, orchestrate, govern, and operate AI models and agents at scale. Our expertise and investments are highly differentiated, giving us a good long-term growth arc. Q: Can you help us understand the evolving partnership with IBM and the impact on revenue performance? A: Harsh (CFO): At the time of the spinoff, approximately 40% of revenue from inherited commercial agreements were in a low to no margin position. Our annual spend with IBM was nearly $4 billion, but over the last 12 months, it was less than $2 billionless than half since the spinoff. During fiscal 2026, especially in the second half, customers increasingly procured certain IBM hardware and software directly from IBM while continuing to rely on Kyndryl for high value services. This pattern has continued into fiscal 2027, creating a similar headwind to our top-line performance. Importantly, these changes do not affect the scope or margin profile of our services, and they have limited impact on our earnings. Our fiscal 2027 outlook assumes similar headwinds throughout the remainder of the year. Q: Can you provide an update on the financial results for the first quarter and the outlook for fiscal 2027? A: Harsh (CFO): In Q1, we generated $3.6 billion of revenue, down 3% year over year on both reported and constant currency basis. For the second consecutive quarter, we delivered 5% revenue growth in the US. We exited the period with For the complete transcript of the earnings call, please refer to the full earnings call transcript.