IBM CEO: Prices for a lot of infrastructure components have gone way up

Summary

IBM CEO Arvind Krishna addresses the company's Q2 earnings miss and revenue guidance cut, attributing it to clients prioritizing spending on rising-cost infrastructure components. He argues that AI is a tailwind for IBM's software, with only 2% of revenue at risk of direct AI replacement. He also comments on the Starbucks/TRIRIGA story and sees future growth from the HashiCorp portfolio.

• IBM missed top and bottom line for Q2 and cut full-year revenue guidance.
• Large infrastructure capex deals slipped out of the quarter due to soaring component prices.
• CEO says AI is a tailwind for IBM, not a headwind, because only 2% of software is vulnerable to replacement.
• Most of IBM's software helps clients manage hybrid infrastructure and prepare for AI adoption.
• Krishna highlights growing usage of large foundation models, open models, and edge/on-premise models.
• Starbucks replaced a small $2M/year real estate lease management tool from IBM, part of the 2% at risk.
• IBM sees potential for Starbucks to become a larger client via the HashiCorp portfolio.