BREAKINGVIEWS-IBM struggles to put out AI fire

IBM Corp

IBM Corp

IBM

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The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

By Pranav Kiran

TORONTO, July 14 (Reuters Breakingviews) - The tech giant misjudged how fast spending is shifting from software to chips and servers sending shares down 25%. Boss Arvind Krishna’s effort to re-orient the company in the face of chatbot mania is getting tougher. The warning reverberates for other firms trying to transform.

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CONTEXT NEWS

IBM Chief Executive Arvind Krishna issued a letter on July 14 warning that the shift of customer spending away from software to servers, storage, and memory purchases happened at a much faster pace than anticipated.

“We did not adapt and move quickly enough, and numerous large deals failed to close on the timelines we expected, driving the majority of our shortfall,” he wrote.

The company forecast second quarter revenue to rise 1% year-over-year to $17.2 billion, the weakest growth rate since the first quarter of 2025.

Shares of IBM fell 25% in late morning trading.


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