IBM Bounces Back from Q2 Shortfall with AI-Focused Recovery
IBM's CEO Arvind Krishna admitted that the company had a shortfall in execution during its second quarter of fiscal 2026, citing a sudden shift in customer spending towards AI-focused hardware components.
The shift was particularly pronounced in capex-sensitive areas of IBM's software portfolio, with customers prioritizing supply chain-constrained infrastructure and cybersecurity-focused software over core software and infrastructure competencies.
CFO James Kavanaugh explained that this led to the company missing a double-digit number of large deals on its expected timelines, accounting for most of the shortfall. However, Krishna stated that about one-third of those deals had since closed.
Krishna remains confident in IBM's business and ability to grow shareholder value, citing plans to increase AI use for software development, sales, marketing, and supply chain optimization.