IBM CEO Says AI Can Replace Only 2% of Software as Shares Fall 30% This Year
Updated
Updated · CNBC · Jul 23
IBM CEO Says AI Can Replace Only 2% of Software as Shares Fall 30% This Year
3 articles · Updated · CNBC · Jul 23
Summary
Only 2% of IBM software is replaceable by AI, Arvind Krishna said, arguing the rest supports clients’ AI adoption and should act as a tailwind for the company.
Wall Street skepticism has intensified after weak second-quarter results: IBM shares are down about 30% this year, and fears rose further after Anthropic highlighted AI tools that can modernize Cobol code.
A 42% drop in Z mainframe revenue in the June quarter also hit software tied to that business, with transaction-processing software down 9% after customers shifted spending to servers and storage as AI-driven memory costs climbed.
IBM still maintained guidance for a $1 billion free-cash-flow bump in 2026, though finance chief Jim Kavanaugh cut expected 2026 software growth to 6% to 8% from prior double-digit confidence.
Krishna said software should recover as mainframe capacity growth feeds through, and about 75% of deals that slipped from the second quarter are expected back before year-end.