IBM says AI delayed software deals, not killed them—a third already returning

IBM faced a sharp market reaction after Q2 preliminary results revealed a significant software sales slowdown, prompting the company to use its earnings call largely as damage control. CEO Krishna's core argument—that customers had not fundamentally abandoned software but had temporarily redirected capital to AI infrastructure—was designed to combat investor fears that the software dollar pipeline had permanently shrunk. The fact that roughly a third of delayed deals had already closed by early Q3 was presented as early validation of this "deferral, not destruction" thesis, though Krishna himself acknowledged the sample was still small.

Wall Street remained unconvinced enough to press hard on the distinction between deferred and destroyed demand, suggesting the market saw real risk in Krishna's narrative. To shore up confidence, IBM pivoted to positioning AI not as a threat to its software business but as the foundation for a new, adjacent revenue stream. Project Lightwell exemplifies this strategy: it sells enterprises AI-powered remediation for the security vulnerabilities that AI tools like Anthropic's Mythos (released in early April) are helping to discover in legacy open source codebases. By framing the opportunity as "multibillion-dollar" and securing commitments from major financial services firms including Bank of America, JPMorgan Chase, and Goldman Sachs, IBM is attempting to redefine the conversation from lost software revenue to AI-enabled growth.