IBM's CEO is betting on quantum computing to drive real revenue by 2028, even as Wall Street remains skeptical and the company recovers from its steepest single-day stock decline in decades
When IBM's chairman and CEO Arvind Krishna appeared on national television in late July, he delivered a message that cut through the noise surrounding transformational technology. While many investors still debate whether quantum computing is more hype than reality, Krishna put concrete numbers and dates on the table: IBM expects quantum computing to have a measurable impact on its revenue and profit by 2028 or 2029, and sees the potential for $1 trillion in value by the end of the 2030s. This level of specificity is rare in a field often dismissed as speculative, and it comes at a time when IBM is under pressure to prove its long-term strategy to Wall Street.
The timing of Krishna's remarks was no accident. Just weeks earlier, IBM's stock suffered its largest single-day drop on record, falling 25% on July 14 after the company disclosed that some enterprise customers were delaying capital spending. According to TheStreet, the market's reaction reflected deep concerns about whether these delays signaled a broader pullback in technology investment or a threat from artificial intelligence to IBM's core software business. Krishna responded by clarifying that about 40% of the delayed deals had already closed within a month, suggesting that the issue was more about timing than lost demand.
Despite the turbulence, IBM reaffirmed its full-year outlook, projecting constant currency revenue growth of 4% to 5% and an increase in free cash flow of about $1 billion year-over-year. In the second quarter, IBM generated $2.5 billion in free cash flow and returned $1.6 billion to shareholders through dividends. The company's board approved a quarterly dividend of $1.69 per share, continuing a streak of consecutive quarterly dividends dating back to 1916.
Quantum Milestones and Market Skepticism
While short-term concerns have dominated headlines, IBM has been quietly advancing its quantum computing agenda. On July 30, IBM and startup Algorithmiq announced research demonstrating quantum advantage-a quantum computer solving certain problems more efficiently than the best classical computers, with results that can be independently verified. This verification is crucial, as skepticism about quantum computing often centers on whether its outputs can be trusted.
IBM also reported separate breakthroughs with the University of Chicago and Israel-based Qedma Quantum Computing. In collaboration with the University of Chicago, researchers encoded 70 logical qubits and solved a problem considered intractable for classical computers in about 15 minutes. With Qedma, IBM modeled materials physics beyond the reach of today's supercomputers. These advances, according to IBM, could eventually lead to better batteries, improved fusion energy, and new medicines-applications that go far beyond theoretical promise.
IBM's commitment is backed by significant investment. In May, the company signed a letter of intent with the U.S. Department of Commerce to build Anderon, which it describes as the world's first dedicated quantum wafer foundry. The project is supported by a $1 billion CHIPS Act incentive from the Commerce Department and a matching $1 billion from IBM. Over the next five years, IBM plans to invest more than $10 billion in quantum computing and aims to deliver its first large-scale, fault-tolerant quantum computer by 2029.
Wall Street's Valuation Disconnect
Despite these milestones, the market remains unconvinced. As of July 30, 2026, IBM shares were down 24.16% year-to-date and 12.62% over the past year, according to Yahoo Finance. Over the same periods, the S&P 500 returned 8.65% and 16.89%, respectively. At current prices, investors appear to be valuing IBM primarily as a software and consulting company with near-term demand challenges, giving little credit for its quantum ambitions.
For investors, the risk is that quantum computing's commercial impact could take longer to materialize than IBM projects. Timelines in this field have slipped before, and technical hurdles such as error rates and scalability remain significant. Yet Krishna's willingness to publicly commit to specific revenue targets and delivery dates signals a level of institutional commitment that sets IBM apart from rivals like Alphabet and Rigetti Computing, which lack IBM's manufacturing scale and enterprise relationships.
IBM's approach echoes a broader trend among major tech companies to pivot from pure research to real-world business applications. For example, AMD's recent focus on powering AI inference in partnership with leading firms like Anthropic and Meta has reshaped its revenue outlook, as discussed in this analysis of AMD's evolving AI strategy.
What's at Stake for Investors
If IBM's quantum roadmap holds, the company could be positioned as a generational technology platform trading at a discount due to cyclical software headwinds. But the outcome is far from certain. Investors weighing IBM's prospects must balance the company's deep institutional resources and government partnerships against the technical and commercial risks that have long defined the quantum computing race.
For now, IBM's story is a test case in how markets price long-term innovation amid short-term volatility. The company's willingness to put its reputation-and billions of dollars-behind a specific quantum timeline is a rare bet in today's tech landscape. Whether that bet pays off will depend not just on technical breakthroughs, but on the company's ability to translate them into real, recurring revenue before the decade is out.
IBM's second-quarter 2026 earnings report showed $15.7 billion in revenue, a 2% decline from the prior year, while net income fell to $1.1 billion. The company's software segment accounted for $6.2 billion of revenue, with consulting bringing in $4.8 billion. These figures highlight the importance of new growth drivers as IBM navigates a shifting technology landscape.
Quantum computing represents a fundamentally different approach to processing information, using quantum bits (qubits) that can exist in multiple states simultaneously. This allows quantum computers to tackle certain problems-such as simulating complex molecules or optimizing logistics-that are effectively impossible for classical computers. However, building reliable, large-scale quantum systems remains a major engineering challenge, with error correction and hardware stability among the key hurdles. For investors, understanding the distinction between theoretical breakthroughs and commercially viable products is essential when evaluating companies like IBM that are betting heavily on this emerging field.
