IBM Sees Shift in Customer Spending, Adapts with AI-Powered Solutions

IBM's CEO Arvind Krishna acknowledged that the company experienced a shortfall in its second quarter of fiscal 2026, particularly in areas sensitive to capital expenditures. This shortfall was attributed to a sudden shift by customers towards supply chain-constrained hardware and cybersecurity-focused software.

In a Q2 earnings call, Krishna emphasized that 'execution' was where IBM fell short during the period. CFO James Kavanaugh explained that this shift in customer spending priorities led to a delay in closing deals on expected timelines, resulting in a double-digit number of large deals being pushed back.

However, Krishna noted that about one-third of those delayed deals have since closed, and he expressed confidence that the remaining deals will be completed over the next six months. He attributed this shift to customers prioritizing other capital investments ahead of expected price increases.

Krisha also highlighted IBM's efforts to adapt to changing client needs, using AI to improve software development, sales, and marketing efforts, as well as optimizing its supply chain. He emphasized that IBM's conviction in the strength of its business remains unchanged and that it is well-positioned to help clients realize value in a secure, cost-effective, and scalable way.