IBM gets sucked into the AI-powered memory chip vortex
IBM has warned investors that corporate IT budgets are shifting heavily toward AI infrastructure and cybersecurity, causing a decline in spending on traditional mainframes. This trend is driven by the urgent need for memory chips and defenses against AI-powered security threats.
Why it matters
It illustrates the 'crowding out' effect where massive AI investment is forcing companies to deprioritize other technology sectors, impacting traditional hardware manufacturers.
A huge whirlpool near Oarai City, Ibaraki Prefecture, northeastern Japan Reuters IBM warned investors of a shift in tech budgets as AI spending impacts other tech sectors. Security spending is increasing as companies react to AI-driven cybersecurity threats. As AI investment soars and memory prices surge, there's only so much money to go around. IBM 's pre-earnings warning to investors reveals a new reality in the AI spending boom: There's only so much money to go around, so some tech companies are winning at the expense of others. The company said customers are shifting technology budgets in two important ways. First, they're spending heavily on memory chips , servers, and storage to build AI infrastructure before expected price increases. Second, they're diverting more money toward cybersecurity as companies race to defend against new AI-powered threats. The result is what amounts to a giant sucking sound across corporate IT budgets.
Get smarter about the news
Sign up free for a feed built around what you actually care about, Dive Deeper research on any story, and the full text of every article.
Create free accountAlready have an account? Sign in