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IBM's Mainframe Business Takes a 25% Stock Hit as Customers Blow Budget on AI Hardware
IBM's mainframe sales took a significant hit in Q2 after customers diverted their capital spending toward servers, storage, and memory to secure AI-related hardware ahead of anticipated supply shortages and price increases. This unexpected shift in client priorities, compounded by large deals failing to close on time, caused Infrastructure revenue to fall 7% and triggered a 25%+ drop in IBM's share price. While businesses like Red Hat and Distributed Infrastructure performed well, the quarter highlights how the AI infrastructure boom is disrupting traditional enterprise IT purchasing patterns.
IBM's Mainframe Business Takes a Kicking as Customers Blow Their Budgets on AI Hardware Instead
IBM's mainframe business suffered a sharp decline in Q2 after customers diverted their capital spending toward servers, storage, and memory to secure AI infrastructure ahead of anticipated price increases and supply shortages. This unexpected shift in client priorities, compounded by execution failures and cybersecurity distractions, caused IBM's Infrastructure revenue to fall 7 percent and its share price to drop more than 25 percent. While some areas such as Red Hat and Distributed Infrastructure performed well, the quarter highlights how the AI hardware boom is disrupting traditional enterprise IT spending patterns.
Nvidia CFO Claims $20 Billion CPU Revenue Year Will Make It the World's Top CPU Supplier
Nvidia CFO Colette Kress announced the company has visibility to nearly $20 billion in CPU revenue this year, positioning it to become the world's leading CPU supplier, driven by its new Vera CPU chip based on custom Arm cores. Major hyperscalers and AI labs including Anthropic, OpenAI, and Oracle have begun taking delivery of Vera-based systems, with Nvidia claiming the chip offers significant performance and efficiency advantages over x86 alternatives. This CPU push comes alongside a strong fiscal Q1 2027, in which Nvidia reported $81.6 billion in revenue — up 85% year-on-year — and forecast Q2 revenues of $91 billion.
Nvidia Posts Record Quarter, Investors Shrug
Nvidia reported record first-quarter results, with revenue up 85% year-on-year to $81.6bn and net income more than tripling to $58.3bn, driven by surging demand for AI infrastructure chips. Despite beating expectations, shares fell 1.6% in after-hours trading, as analysts noted investors have grown accustomed to Nvidia's exceptional performance and are seeking even higher growth. Concerns about increasing competition, as major clients develop their own chips, also weighed on investor sentiment.