IBM’s recent stock decline following a disappointing earnings pre-announcement has raised questions about the company’s future amid the ongoing artificial intelligence (AI) boom. However, Chief Executive Arvind Krishna remains confident in IBM’s long-term prospects, emphasizing the firm’s entrenched role in critical infrastructure and its potential in emerging technologies such as quantum computing.
IBM, founded 115 years ago, continues to underpin vital sectors of the global economy. Its mainframe systems process an estimated 70% by value of all daily financial transactions, including credit card authorizations, insurance operations, banking, and airline logistics. Krishna highlighted the importance of IBM’s hardware and software, noting that without them the broader economy would face severe disruption. The company’s mainframes and servers, though less publicly prominent than newer AI models, provide a stable and profitable foundation. IBM reported $4.8 billion in free cash flow during the first half of 2026, contrasting with tech rivals like Alphabet, which recently disclosed negative cash flow for the first time since going public.
Despite a tech industry shift toward cloud computing and away from specialized mainframes, many of IBM’s customers—primarily established Fortune 500 companies—still depend heavily on these systems. The stock market reaction followed Krishna’s disclosure that several large deals had been delayed, attributed to clients moderating IT spending due to rising costs linked to AI investments. Nevertheless, he expressed confidence that most of these deals would close within six months, noting some have already been finalized more quickly than typical deferred transactions.
IBM’s hardware accounts for roughly 20% of its revenue, with mainframes representing about a quarter of that segment. Beyond hardware, much of the company’s software and consulting services are driven by mainframe sales. Krishna estimated that for every dollar spent on mainframes, customers typically spend an additional three to four dollars on related IBM offerings. Integral to this ecosystem is IBM’s longstanding commitment to custom processor design. Its proprietary Power architecture powers servers running critical business applications, while the Tellum II processor drives its latest mainframes—an approach that distinguishes IBM from competitors who rely on more standardized chip architectures like Intel’s x86 or ARM.
IBM employs close to 300,000 people globally, with only 20% based in the United States. Approximately 160,000 employees work in services, which requires significant local presence and language capabilities due to client demands. Krishna anticipates that AI’s rise will expand IBM’s consulting revenues, as most non-tech companies lack the internal expertise to adopt and implement advanced AI systems without external support.
Looking ahead, IBM is heavily investing in future technologies, especially quantum computing, which Krishna believes could become a trillion-dollar market by the end of the 2030s. The company aims to release a commercially viable quantum computer by 2029. Recently, IBM secured $1 billion in federal funding under the Trump administration to support a quantum-chip manufacturing facility and announced plans to acquire HRL Laboratories, which conducts advanced quantum research. Alongside quantum computing, IBM is pushing innovative chip technologies such as sub-nanometer manufacturing and funding AI-driven cybersecurity efforts through a $5 billion initiative called Lightwell aimed at identifying and remediating vulnerabilities in open-source software.
Despite skepticism from some experts who suggest practical quantum computing may be decades away, Krishna remains optimistic. He compares IBM’s current position to that of Nvidia, which benefited greatly by being an early leader in GPUs for AI workloads. While IBM’s growth has been modest over recent decades, the company’s strategic focus on infrastructure reliability and cutting-edge research positions it as a potentially steady player amid a rapidly evolving technology landscape.