{"id":136302,"date":"2026-07-23T00:46:14","date_gmt":"2026-07-23T00:46:14","guid":{"rendered":"https:\/\/mailinvest.blog\/index.php\/2026\/07\/23\/after-shocking-quarter-ibm-insists-that-ai-isnt-killing-the-mainframe\/"},"modified":"2026-07-23T00:48:11","modified_gmt":"2026-07-23T00:48:11","slug":"after-shocking-quarter-ibm-insists-that-ai-isnt-killing-the-mainframe","status":"publish","type":"post","link":"https:\/\/mailinvest.blog\/index.php\/2026\/07\/23\/after-shocking-quarter-ibm-insists-that-ai-isnt-killing-the-mainframe\/","title":{"rendered":"After shocking quarter, IBM insists that AI isn’t killing the mainframe"},"content":{"rendered":"

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On Wednesday, IBM formally reported earnings and the information was as dangerous as everybody knew it will be. <\/p>\n

Whereas the 115-year-old firm nonetheless generates boatloads of money \u2014 $17.2 billion in income, $9.9 billion in gross revenue, practically 58% margins, and $2.2 billion in web earnings for the quarter \u2014 its outcomes fell effectively in need of Wall Avenue\u2019s expectations.<\/p>\n

It was such a foul miss that IBM CEO Arvind Krishna and the board took an unprecedented step of warning buyers forward of time that the earnings \u201cwas worse than our expectations,\u201d providing everybody a sneak peek.<\/p>\n

He printed a \u201cletter to investors,\u201d<\/a> final week sharing preliminary outcomes. It warned of abysmal income within the firm\u2019s all-important \u201cinfrastructure\u201d class and mentioned that revenue margins have been additionally going to take successful. The corporate\u2019s inventory immediately tanked 25%, it\u2019s biggest single-day decline ever<\/a>. Till then, the inventory had carried out effectively underneath Krishna\u2019s six years of management, buoyed by the AI information heart growth that had been lifting all boats.<\/p>\n

On Wednesday, IBM additionally lowered its full-year progress forecasts, which means this horrible quarter would influence the remainder of the 12 months. The wrongdoer? IBM\u2019s cash-cow mainframe enterprise was down 42%.<\/p>\n

That\u2019s a cascading drawback, as a result of as CFO Jim Kavanaugh defined on the quarterly name with buyers, IBM earns $3 in software program income for each $1 of mainframe {hardware} it sells.<\/p>\n

Nonetheless, the CEO and CFO spent the decision insisting that this was a brief blip and all could be effectively quickly. <\/p>\n

What occurred, they mentioned, was that \u201ctens\u201d of consumers that have been on account of purchase a brand new mainframe through the quarter opted not to take action. That will not sound like quite a lot of prospects, however mainframes are programs that price a whole lot of hundreds to hundreds of thousands of {dollars}, and with upkeep contracts and software program, generate many hundreds of thousands extra.<\/p>\n

The identical AI growth that lifted IBM\u2019s boat additionally sank it.<\/p>\n

As a substitute of shopping for a brand new mainframe, these shoppers purchased different {hardware}, Krishna defined. They have been confronted with astronomically excessive price will increase of 15% to 30% for information heart gear and PCs. <\/p>\n

\u201cOnce they have been confronted with that problem, then they determined to maneuver funds to these areas the place they have been having that excessive worth,\u201d Krishna mentioned.<\/p>\n

Enterprise {hardware} makers like Dell and HP have warned that rising prices on parts like reminiscence, attributable to the AI build-out growth, have forced them to raise prices<\/a>. Apple has said the same<\/a>.<\/p>\n

However Krishna promised that these prospects will nonetheless purchase their new mainframes finally \u2014 together with their new software program contracts. In actual fact, he mentioned a few of them have already executed so this quarter. \u201cWe see no proof of shoppers shifting off the mainframe,\u201d he mentioned.<\/p>\n

We\u2019ll have to attend and see. However the tech trade has predicted the loss of life of the mainframe for a lot of many years now. Possibly even AI gained\u2019t kill it. <\/p>\n<\/div>\n

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