IBM CEO Arvind Krishna warns AI spend 'out of control'; stock falls

IBM's quarter looked strong on paper: revenue of $17.1 billion beat the $16.8 billion consensus, adjusted earnings of $2.95 per share topped the $2.86 estimate, and the top line grew 5.9% from a year earlier while earnings rose 11%. The stock initially jumped as much as 7.3% in after-hours trading. But the 5:00 p.m. ET conference call changed the mood. When an analyst asked about corporate IT budgets, CEO Arvind Krishna said clients are 'getting worried if some of the AI spending [is] completely out of control with no real return,' and noted that real implementation requires extensive workflow reengineering: 'It is not a little [robotic process automation] tool that you bolt on, and you get something.' The stock plunged at that moment and was down 4% after hours. The chill spread beyond IBM: Tesla also reported the same night with guidance hinting at cooler data center capital expenditures, and infrastructure names like Nvidia, Oracle, and CoreWeave began falling around 6:00 p.m. ET as the call ended. The episode suggests that even as AI spending remains high, concerns about proof of return are now being voiced by a major enterprise vendor's CEO, which may prompt closer scrutiny of AI budgets.