IBM Attributes Software Slump to AI Infrastructure Spend
AI-generated image · US National Wire
CEO Arvind Krishna claims delayed Q2 deals are returning, though investors question if demand was deferred or destroyed.
IBM is characterizing a significant dip in second-quarter software deals as a temporary setback caused by enterprise customers prioritizing AI hardware over software, according to reporting from The Register.
During an earnings call, IBM CEO Arvind Krishna stated that the software "wobble" resulted from large clients diverting capital expenditures toward servers, storage, and memory. Krishna noted that about one-third of those delayed deals have already closed within the first three weeks of the new quarter, suggesting the trend was a "deferral and not destruction."
Despite these assurances, the market remains skeptical. The Register reports that Evercore's Amit Daryanani questioned whether customer spending priorities had fundamentally shifted, a concern that contributed to one of the company's steepest stock slides in years.
To pivot toward future growth, Krishna argued that the massive investment in AI infrastructure will force enterprises to seek meaningful returns, shifting value toward data and orchestration layers. IBM is targeting this shift with Project Lightwell, a service designed to use AI to remediate security vulnerabilities in aging open-source software—a problem Krishna says was accelerated by the April release of Anthropic's Mythos.
IBM describes Project Lightwell as a "multibillion-dollar" opportunity. The service costs $1 million per year, and Krishna identified early adopters as Mastercard, Visa, Bank of America, Citi, Goldman Sachs, JPMorgan Chase, Morgan Stanley, and Wells Fargo.