IBM Says 1-3 Delayed Q2 Software Deals Returned as 60% Chip Price Spike Hit Spending
Updated
Updated · Fox Business · Jul 23
IBM Says 1-3 Delayed Q2 Software Deals Returned as 60% Chip Price Spike Hit Spending
3 articles · Updated · Fox Business · Jul 23
Summary
One-third of IBM’s enterprise software deals that slipped out of Q2 have already returned, CEO Arvind Krishna said, signaling the earnings miss reflected a short deferral rather than lasting demand destruction.
A nearly 60% jump in semiconductor hardware prices pushed Fortune 100 clients to redirect capital spending toward physical servers, squeezing IBM’s upfront software sales.
IBM cut its full-year revenue growth forecast to 4% to 5% from above 5% a day earlier, after warning this month that hardware inflation was disrupting customer budgets.
Krishna said IBM will lean harder on its subscription base—80% of software revenue—so growth depends less on the 20% tied to upfront purchases, while also increasing investment in quantum technology.
Did IBM’s earnings miss reveal a deeper AI spending shift, with enterprise customers buying hardware first and delaying software until infrastructure is ready?
As IBM leans harder into subscriptions, AI, and quantum, can recurring revenue offset volatile upfront sales and mainframe swings?