IBM reports slower revenue growth as AI disruption concerns weigh on outlook

IBM has reported a slowdown in revenue growth for its latest quarter, as concerns around artificial intelligence continue to weigh on its software business outlook.

The company’s overall revenue grew at a slower pace compared to the previous quarter, even as it managed to exceed analyst expectations. The softening momentum was largely driven by its software segment, where investors are increasingly assessing the potential impact of AI tools on traditional enterprise software demand.

Market concerns have intensified around whether generative AI systems could automate or replace portions of routine software functionality, particularly in enterprise workflows. This has added pressure on legacy software vendors that rely heavily on recurring enterprise contracts.

Despite this, IBM’s infrastructure business continued to show resilience, supported by demand for its mainframe systems and hybrid cloud offerings. The segment remains a key stabiliser in its overall portfolio as enterprises continue investing in large-scale compute infrastructure.

The company’s AI-focused initiatives, including its enterprise platforms, remain a central part of its long-term strategy. However, investor sentiment reflects a broader market transition where AI is simultaneously seen as a growth driver and a potential disruption layer for established software players.

Following the results, IBM’s shares came under pressure in after-hours trading, reflecting cautious market positioning around near-term software growth visibility.

The results highlight a widening divergence in the tech sector, where AI infrastructure and hardware demand remain strong, while software-heavy businesses are navigating uncertainty around long-term monetisation models.