CEO, President & Chairman, IBM Common Stock
IBM CEO Arvind Krishna Talks Quantum Advantage, Profit Strategy | Bloomberg Talks
IBM CEO Arvind Krishna says he's excited about the potential uses for quantum computing. Speaking with Romaine Bostick at the Mizuho Technology Conference in New York, Krishna also comments on the Trump administration's investment in the company, the utilization of AI and IBM's profit strategy.
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About Arvind Krishna
Arvind Krishna, chairman and CEO of IBM, said in June 2026 that the company is on track to achieve "quantum advantage" using its hardware by the end of the year, citing progress from partners such as the Cleveland Clinic and Oak Ridge National Laboratory. He stated that the U.S. is ahead of China in quantum computing by a couple of years, but added that he is "paid to be paranoid" and does not dismiss concerns about Chinese progress. Krishna compared the current state of quantum and cybersecurity technology to where GPUs were in 2015 and 2016, predicting "incredible returns" from these technologies within two to three years. He also noted that a $1 billion investment from the Trump administration will be used to build a quantum chip foundry in Albany that will be open to other U.S.-accepted companies. Regarding AI, Krishna described the Trump administration's AI executive order as hitting a "Goldilocks spot" by providing light regulation without creating a large bureaucracy. He advised companies to begin preparing for post-quantum encryption risks now, warning that it would be a mistake to assume quantum computers capable of breaking current encryption are more than five years away. On AI's return on investment, Krishna said that companies seeing the most value are not simply deploying more models, but finding ways to use existing models more effectively. He also mentioned that IBM tripled its hiring of recent college graduates in 2026, arguing that AI tools make new hires more productive more quickly, giving the company a cost advantage.
Transcript (41 segments)
✨ AI-enhanced transcript with speaker attribution
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Bloomberg Audio Studios0:02
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Joe0:08
Roma brings us a very important conversation right now against the backdrop of this market. Roma Bostic at the Missouo Tech Conference underway right now in New York with the CEO of IBM. This is live on Bloomberg. Roma, take it away.
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Roma Bostic0:25
Thank you Joe. I am here with the CEO of IBM, Arvind Krishna, here at the Missouo Technology Conference in lower Manhattan. Great to have you here.
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Arvind Krishna0:33
Pleasure to be here with you, Roma.
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Roma Bostic0:35
Obviously, all the talk is about AI. We talk about digital AI, biological AI, physical AI. Everyone's already looking around the corner, including you, to quantum, which of course many people think is going to be the next big thing. Something that IBM has been working on for years. Two years ago, you laid out a relatively ambitious target that we would actually see quantum advantage using IBM hardware by the end of 2026. We're halfway through the year. Are we going to get that?
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Arvind Krishna1:03
Absolutely. If I look at what some of our partners like the Cleveland Clinic are getting done, what the national labs like Oak Ridge are getting done, I can already see the early signs of the progress they've made.
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Roma Bostic1:16
When we talk about what that progress could mean not only for the world of business and finance but as an application through our society, is healthcare the first place that gets it?
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Arvind Krishna1:28
I think that materials or maybe simple molecules are the very first place, maybe magnetic materials as alternates for some of these things that are very hard to get. I'll use the word rare as a bit of a pun over there. I think lubricants to maybe get more effective energy, maybe better EV batteries, and then small molecule drugs are there in the first set. But I also want to be equally excited about what we could do about modeling weather perhaps or modeling flows to improve how chemical plants work. Maybe aerodynamics to improve how vehicles and airplanes work. These are really, really exciting use cases for us.
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Roma Bostic2:08
I am curious though. When we talk about actually starting to see some sort of proof of life on quantum advantage this year, your own head of research has said that that process might be a little bit more elongated. Is there a disconnect between your ambitions and what he's seen from the scientific perspective?
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Arvind Krishna2:24
No. So I'll take an example of what's happening on molecule properties. So last summer, June of '25, we could maybe understand a five-atom molecule. You react with that, that's not very exciting. You could do that on a piece of paper if you're smart enough.
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Roma Bostic2:40
Okay. I'm not smart enough, but I trust you.
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Arvind Krishna2:42
Last November, that team could do a 300-atom molecule.
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Roma Bostic2:47
Okay. You'll say that's great progress. 5 to 300, but you could probably do that on a normal supercomputer. So, okay, that's not quantum advantage.
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Arvind Krishna2:58
This April, they did 12,000 atoms. They did half of a protein called Tryson. I think they're on their way to about 30,000 atoms already. So 5 to 300, same amount of time. 300 to 12,000, one more month. 12 to 28,000. It gives you the rate of improvement. Some of it from the hardware, some of it in algorithmic techniques that people are learning of what can work. By the way, at this size, you can't actually do it any other way.
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Roma Bostic3:27
Okay. Well, we talk about the commitment that you've made to this. You've invested or committed to invest about $10 billion in this, which I assume is the tip of the iceberg. You got some pretty big backing from the federal government giving you $1 billion. Not that you need it, but certainly a vote of confidence. When you start to see the government getting involved, obviously you have a lot of, I guess, quasi-competitors in this space also getting involved. Does that accelerate this pace?
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Arvind Krishna3:52
That's what I believe the government investment is for. So if you look at it, it's not so big that it's controlling everything. However, it's a sign of endorsement and it is a signal of them wanting to get speed. Or IBM, you're going to do this if we commit to do this, will you do it faster? Will you open it up to everybody else so it's open to the ecosystem? And we said yes, because we actually believe an ecosystem is important. And if government investment gets us there a year or two or three before we might otherwise, both of those are worth it. And that is what is important about that.
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Roma Bostic4:27
The $1 billion investment from the Trump administration is specifically to build up a chip foundry, if you will, a quantum chip foundry.
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Arvind Krishna4:35
A quantum foundry that we have committed will be open to all comers that are acceptable to the United States. So the three dozen odd companies that are here, we are happy to give them our best technology, the same as we use for ourselves at that level.
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Roma Bostic4:51
Right. That they all get access to. And you say all comers as to what's been approved. This is the idea that this is about furthering the US's aims to make sure that they have an advantage with regards to what gets made, and I would presume so that it doesn't get in the hands of the countries that we don't want it to have.
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Arvind Krishna5:07
Well, I think that is easy. I mean, there have always been restrictions on advanced technologies that you cannot sell it or provide it to certain places. I think that is fine. But in a new area, it's really important to be first, both for the economic competitiveness long-term but also for national security. I think for those two reasons, it's imperative that we get there first.
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Roma Bostic5:28
Do you think the US will be there first on quantum?
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Arvind Krishna5:30
Absolutely.
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Roma Bostic5:32
You're not concerned about some of the reports that we've heard about some of the progress that we've already seen in China?
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Arvind Krishna5:37
I am paid to be paranoid. So I wouldn't say I'm not concerned. However, from everything I can see, I think we are ahead. Are we ahead by a decade? Probably not. But are we ahead by a couple of years? That would be my guess.
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Roma Bostic5:51
I do want to talk about just AI in general. At your Think conference last month, you talked a lot about this idea of the progress companies are making with regards to the deployment of AI and more importantly some of the progress they aren't making. You've talked about this idea, or IBM has certainly talked about this idea, of the limited ROI that we've seen so far. You say that the companies that are getting this right aren't necessarily the ones that are just deploying more models, but they're finding ways to take the models that they already have and use them better. Explain that.
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Arvind Krishna6:21
I'll give you an example. So you can certainly improve productivity of individuals. We'll call that productivity apps. That's where both economists and CFOs get very concerned. But where's my bottom line on that? Is it leading to less expense or more revenue? Where is that? And that's hard to find. But let me give you a second example and you'll say, 'Okay, I can see that.' We are pretty acquisitive. Anybody who does M&A, you often bring the entity in and actually normally your profits might decrease for the first year or two until you take all of the cost and get the cost synergy. Using AI tools, now, we can probably add 10 points of profit synergy on day one because the amount of time it used to take to move contracts over, to do all of the sales automation, to do all of the revenue forecasting, all of that now using AI can be shrunk down to literally a few weeks. If you can do that, I can now take that 10%. I'm not saying it's 90%, but 10%. And invest it instead in marketing and R&D and innovation to drive the revenue growth even higher. That's an example of what I mean by use the AI to really fundamentally change how you do business. It's got to become part of your operating model of the company.
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Roma Bostic7:38
Are you taking that medicine yourself internally?
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Arvind Krishna7:41
We are. In the last acquisition we did, we actually managed to take out about 60% of the G&A on day one.
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Roma Bostic7:49
What's the message though that you have not only for your partners but also internally for your own workforce with regards to how this actually not only helps but maybe the idea that maybe it requires a smaller headcount?
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Arvind Krishna8:02
It's not necessarily going to be a smaller headcount. So a lot of people talk about this. So let me give you an example on early on college hires. We tripled our hiring in 2026 compared to 2025.
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Roma Bostic8:13
Okay. For entry level positions?
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Arvind Krishna8:16
For entry level positions. Tripled absolute number, tripled. So you look at me and say why? Because my belief is if these tools make people who are coming in out of college more productive quicker, that means we are going to be advantaged by having more capacity to build things at a cheaper cost point, which means we can go get market share. Will the shape of the workforce change? Absolutely. But I think there will be more people in the value-driving functions, be it R&D, be it sales, be it marketing and the creative activities, and some of what I would call classic back office will decrease because you don't need so much there. So the shape of the workforce changes, total employment is not decreasing.
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Roma Bostic8:56
I want to talk about security. Obviously we know the potential opportunities when it comes to AI, quantum and everything in between. You've invested about, so far, a commitment of about $5 billion towards something called Project Lightwell. The idea that it gives your partners a little bit more visibility about flaws in that sort of AI chain, if you will, for my sort of uninformed framing of it. But talk about why that's necessary and more importantly, is 5 billion going to be enough?
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Arvind Krishna9:25
It's hard to tell whether any amount is enough here. I think, look, this is like asking why are cyber criminals existing. And the old Willie Sutton joke was, 'Well, I rob banks because that's where the money is.' Well, if you know money's inside the cyber infrastructure, they're going to come. Our investment in Lightwell, I think a lot of people can point out the problems and point out vulnerabilities. Our investment in Lightwell is actually about fixing them. So we are saying that not just open source that we are good at, but if you have open source and the source code is known, we can use these same tools that are used to find vulnerabilities to also create the fix and give it back to the community. That is really what Lightwell is about. Of course, in order to do that, you need cooperation around where people are finding things, how critical are they, where are they in the critical infrastructure. So, that is the whole project, but it's actually about us coming up with an antidote, not just the problem.
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Roma Bostic10:18
This, I can just tell by looking at your face, this is probably an exciting time for you. IBM is obviously a storied company when it comes to computing and we are clearly at the inflection point of something new and maybe something better. You've gotten a big bump in your stock price largely because of at least the government backing or at least the government support. Is there a sense here when we talk about the potential for an acceleration in revenue growth, the widening of profit margins, that that is something that is imminent or is that something still long-term?
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Arvind Krishna10:48
Well, depends on what you call long-term. I kind of liken what we're doing on quantum and cyber to where GPUs were in 2015, 2016. And each era of technology tends to go faster. So if I say QPUs plus cyber is going to go fast, I think in the next two, three years we're going to see incredible returns coming from these technologies into our numbers.
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Roma Bostic11:13
And with those ambitions, you have the capital you need in order to do that. Any plans to maybe go to the market to look for a little bit more?
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Arvind Krishna11:20
We go to the markets all the time. We are always in the debt markets and so far our debt investors have been very confident in us and we get great rates there. We could maybe dip into other markets but I think for what I'm pointing out over the next five years, I think we have the capital and we got the wherewithal inside.
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Roma Bostic11:39
Arvind, really appreciate you joining us.
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Arvind Krishna11:41
My pleasure.
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Roma Bostic11:42
That's Arvind Krishna. He is the CEO of IBM.