After shocking quarter, IBM insists that AI isn’t killing the mainframe
IBM reported a significant earnings miss, with its stock dropping 25% following a 42% decline in mainframe hardware sales. CEO Arvind Krishna attributed the shortfall to a temporary shift in customer spending toward other hardware, though the company lowered its full-year growth forecasts.
Why it matters
As a legacy tech giant, IBM's struggle highlights the volatility of traditional hardware businesses as they attempt to pivot toward AI-driven infrastructure.
On Wednesday, IBM officially reported earnings and the news was as bad as everyone knew it would be.
While the 115-year-old company still generates boatloads of cash — $17.2 billion in revenue, $9.9 billion in gross profit, nearly 58% margins, and $2.2 billion in net earnings for the quarter — its results fell well short of Wall Street’s expectations.
It was such a bad miss that IBM CEO Arvind Krishna and the board took an unprecedented step of warning investors ahead of time that the earnings was “was worse than our expectations,” offering everyone a sneak peek.
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