IBM CEO Arvind Krishna addresses the Q2 earnings miss, clarifying delays in capital expenditure deals, and outlines IBM's strategy to incentivize consumption-based offerings on ‘The Claman Countdown.’ #fox #media #breakingnews #us #usa #new #news #breaking #foxbusiness #theclamancountdown #ibm #arvindkrishna #arvind #technology #ai #artificialintelligence #quantumcomputing #cloudcomputing #earnings #business #economy #stocks #investing #innovation #nationalsecurity #enterprise
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What Arvind Krishna said
Written from the verified transcript and checked against it. Every figure links to the moment it was said.
IBM CEO Arvind Krishna addressed the Q2 earnings miss, attributing it to large upfront deals at large clients being deferred, not destroyed. He noted that one third of Q2 deals have already returned, signaling a short-term deferral. He cited semiconductor-driven inflation, with prices up 60% year over year, as a cause for client hesitation. Krishna argued that AI remains a tailwind, pointing to double-digit growth in the portfolio and consulting, and noted that open models already exceed large foundation models. He described the affected clients as tens from the Fortune 100 globally, reprioritizing spending. He outlined a shift toward consumption-based offerings, with 80% of software already consumption-based. He discussed the acquisition of HRL, a quantum computing lab, and estimated quantum could have a trillion-dollar impact by the end of the next decade. He defended the decision to issue a profit warning as transparent.
Key takeaways
One third of Q2 deals have already come back, signaling deferral not destruction.
Semiconductor prices are up 60% year over year, driving client spending delays.
80% of IBM's software business is already consumption-based, with a focus on growing that segment.
Open models already exceed large foundation models, a tailwind for IBM's AI strategy.
0:17Can IBM perform a hard reset before more investors hit the leaks?
1:12When investors see that, some assume last week's warning and subsequent earnings missing this time around is more than just a one quarter problem. Are they wrong?
2:28But can I ask you, a few more months, not a few more years, is it months or quarters?
3:19But if your own clients choose to spend their AI dollars on infrastructure that doesn't flow through IBM, is that not the market telling you something uncomfortable about IBM's position in the AI stack?
5:20What did they say to you at the end of June when they told you this is what's happening, we've got to move our money?
6:41What concrete actions, not strategies but actual action, the number one action you've told your team we need to take right now so this gets in the rearview mirror and doesn't rear its head again?
7:37The Trump administration has been keenly interested in, so much so that they invested or exceeded a billion dollars in your efforts in quantum?
Trade, shares with earlier drop as low as $199 reversed and right now are slightly green, slight back and forth across the flat line but they are $204.62. A lot better. The stock has so much more ground to make up. Last night, IBM reported revenue and earnings that came in below even the Wall Street lowered expectations which they had to drop after the company stood investors last week with a rare great earnings profit warning that triggered the worst single day stock drop in the company's 115 year history. Can IBM perform a hard reset before more investors hit the leaks? Joining me now, IBM Chairman and CEO Arvind Krishna. Thank you for coming on the Claman Countdown, we appreciate it.
You got some analysts from major banks standing by today even though last night you printed your sales growth forecast from what was more than 5% to a range of 4 to 5%. When investors see that, some assume last week's warning and subsequent earnings missing this time around is more than just a one quarter problem. Are they wrong?
I think the problem wasn't one very narrow area. The narrow area was large upfront deals at large clients. As we see them come back, it becomes more of a deferral and not destruction, and I think the tide for the positive upside from our investors because we want to be conservative, have conviction in what we can do, so we took down the revenue guide presuming some of the issues will carry on for a few more months, not a few more years. Hence the revenue came down, but we have productivity maintaining cash flow, so that is the two halves of what went on. And just one fact: one third of the deals out of the second quarter have already come back, that gives us a signal, maybe not proof, but a signal that it was a deferral for a few weeks, not destruction.
That's good news for you guys and shareholders. But can I ask you, a few more months, not a few more years, is it months or quarters? I want to get that clarified.
This is a question I find hard to predict because it came so suddenly, and the second quarter just in the last couple of weeks of June. But it's hard to predict where is it that the inflation driven by semiconductors into the service, when they think that will come down to more normal levels, 10 or 20% a year, then they will buy. Those are going up 60% year over year, and people are... and that's a classic inflation. If it goes up that much, they can't buy that now, so I redirect to that side.
So that's what you are regarding deferred. But you talk about the fact that clients rush to buy AI infrastructure, server, storage, memory, ahead of expected rate increases, meaning they will pull from the traditional software and infrastructure. We followed the major price hikes, especially in memory. But over the past two years, you've positioned IBM as a crucial part of the AI stack. You have consistently described AI as a tailwind for IBM. But if your own clients choose to spend their AI dollars on infrastructure that doesn't flow through IBM, is that not the market telling you something uncomfortable about IBM's position in the AI stack?
We will prove it to you over the next six months. Growing double digits in the portfolio, growing double digits, and our own consulting growing double digits. And that tells us we have a problem in that it is just the pressure of timing? We see 85% growing their capacity, and those are all positive signals. I believe on AI, the reason I believe AI is a tailwind for us, I believe people use the large foundation models, but they will also use open rate models. So open, simple fact: open models already exceed the large foundation models. It's just a fact because you can see from third party research out there. The models on the edge and on premise are yet to come, and people who need to manage across those environments, that is the tailwind for us. And I do believe it will go there because people will not only use extremely expensive models on angular infrastructures.
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Krishna, A. (2026, July 23). 'DEFERRED, NOT DESTROYED': IBM CEO breaks down Q2 earnings miss [Interview transcript]. Fox Business. CEOInterviews.AI. https://ceointerviews.ai/interview/1117891/
MLA
Arvind Krishna. "'DEFERRED, NOT DESTROYED': IBM CEO breaks down Q2 earnings miss." Fox Business, 23 Jul. 2026. Transcript, CEOInterviews.AI, https://ceointerviews.ai/interview/1117891/.
BibTeX
@misc{krishna2026_1117891,
author = {Arvind Krishna},
title = {'DEFERRED, NOT DESTROYED': IBM CEO breaks down Q2 earnings miss},
howpublished = {Interview transcript, Fox Business. CEOInterviews.AI},
year = {2026},
month = {jul},
url = {https://ceointerviews.ai/interview/1117891/},
note = {Speaker-attributed transcript with timestamps}
}
