IBM Sees Rebound After Q2 Software Shortfall Due to AI Shift

IBM's second quarter software shortfall was attributed to a sudden shift in customer spending towards AI-focused hardware components, according to CEO Arvind Krishna.

This shift away from IBM's core software and infrastructure competencies led to a double-digit number of 'large deals' being delayed or cancelled, resulting in a shortfall that accounted for the majority of IBM's Q2 earnings disappointment.

Krishna acknowledged that the vendor had fallen short in execution during the quarter, but expressed confidence that the company was adapting to deliver greater business value to clients and better align with their priorities.

IBM has already seen some rebound, with about one-third of the delayed deals having since closed. Krishna noted that this was a positive indication that the shift was due to deferral rather than destruction of business.