IBM CEO Blames Execution for Q2 Software Sales Shortfall
IBM CEO Arvind Krishna admitted that the company's software sales fell short in its second quarter of fiscal 2026, but expressed confidence that it was due to execution rather than a fundamental shift in market demand.
The shortfall was largely attributed to a sudden and dramatic shift by customers towards AI-focused hardware components outside of IBM's traditional offerings, as well as supply chain-constrained infrastructure purchases. This shift led to the vendor missing out on several large deals that were expected to close by the end of June.
However, Krishna claimed that one-third of these delayed deals had since closed, and expressed optimism about the company's ability to adapt to changing market conditions and deliver greater business value to clients around its innovation.
Krishna also highlighted IBM's recent software-focused acquisitions, including Red Hat, HashiCorp, and Confluent, which have powered a majority of the company's high-margin subscription-based recurring software revenues. He noted that these operations are well-positioned to help clients realize value in a secure, cost-effective, and scalable way as they determine how and where to deploy AI.