IBM cuts annual revenue growth forecast to 4-5% as customers prioritize AI infrastructure spending

Published Jul 22, 08:10 PM UTC

IBM cut its annual revenue growth forecast to 4-5% from over 5%, citing a shift in corporate spending toward AI-focused data-center gear at the expense of its software and mainframe computers. The company missed Q2 profit and revenue expectations, with mainframe revenue plunging 42%. CEO Arvind Krishna noted that large capex deals slipped but said about one-third have since closed, adding that demand is deferred, not destroyed. Shares fell marginally after a 25% drop the prior week. Analysts suggest IBM's software woes may be company-specific rather than sector-wide. The forecast highlights investor fears that AI hardware spending is crowding out broader software investment.