IBM CEO Krishna on Confluent Deal, AI and Hiring

Summary

• IBM completed its $11 billion acquisition of Confluent, which enables real-time data movement for AI agents in hybrid cloud environments.
• Regulatory environment is friendlier, allowing the deal to close in under four months, potentially enabling more M&A in the software space.
• IBM's strategy is focused on hybrid cloud and AI, with targeted acquisitions and organic development like Watson X and mainframe modernization.
• Partnership with NVIDIA achieved a five times speed-up in data analysis for client Nestle, showcasing efficiency gains.
• IBM is model-agnostic, helping clients integrate frontier models (e.g., from Anthropic, OpenAI), open source, and IBM's own models for ROI, with 2026 seen as the year for enterprise AI ROI focus.
• AI is explicitly a tailwind for IBM, countering investor misconceptions from a blog post about COBOL modernization, which IBM had tools for already.
• IBM has taken $4.5 billion out of the enterprise using AI and automation, reinvesting $3 billion into R&D, sales, marketing, and client engineering.
• Job displacement of 5-10% is expected, with IBM halfway through that journey, but total employment remains stable due to reinvestment and hiring.
• IBM plans to hire two to three times as many entry-level college graduates this year compared to last.
• Geopolitical issues in the Middle East disrupt about 20% of IBM's employees in the region, but consulting business there is only a single-digit percentage of total business, minimizing financial impact.
• Consulting growth is expected to improve, with an inflection in the second half of this year and true growth likely later.
• Quantum computing is on track, with real use cases (e.g., Cleveland Clinic, HSBC), error correction demonstration expected soon, and partnerships with academia and national labs.