IBM CEO Claims Only 2% of Software at Risk from AI, as Q2 Mainframe Revenue Drops 42%

According to CNBC interview on Thursday, IBM CEO Arvind Krishna claimed that only 2% of the company's software could be replaced by artificial intelligence applications, as he sought to reassure investors following disappointing second-quarter results. Krishna told CNBC's "Squawk on the Street" that the remainder of IBM's software helps clients prepare for AI by unlocking real-time data and reducing management complexity across hybrid infrastructure.

However, IBM's Q2 performance contradicted the reassurance. Z mainframe revenue dropped 42% in the quarter, while transaction processing software declined 9%, a sharp reversal from Q1 when Z revenue grew 48%. Finance chief Jim Kavanaugh lowered the company's software revenue growth forecast to 6%-8% for 2026, down from prior guidance of double-digit growth. Software currently accounts for 45% of IBM's revenue.