IBM says AI didn’t kill software sales, just pushed them back

Hardware spending eclipses software plans

Big Blue announced on July 23, 2026 that its enterprise customers are delaying, not abandoning, major software purchases. The company attributes the slowdown to hardware spending swallowing budget allocations, not to artificial‑intelligence hype.

IBM executives explained that many firms are reallocating funds to refresh servers, storage, and networking gear. Those upgrades consume a large share of IT budgets, leaving less room for new software licences. The company insists the trend reflects timing issues rather than a loss of confidence in AI‑driven solutions.

The shift toward infrastructure upgrades has been pronounced across sectors. Finance, manufacturing, and healthcare firms reported prioritising data‑center refreshes to meet rising demand for processing power. „Our clients are choosing to modernise the foundation first,” said an IBM spokesperson. „When the hardware is in place, they will resume software projects, including AI tools.”

Is AI really the culprit for the slowdown?

Analysts note that the pattern mirrors previous cycles where capital‑intensive projects precede software rollouts. IBM’s own quarterly report showed a modest dip in software order intake, while hardware revenue held steady. The firm expects the backlog to convert into new software contracts once capital cycles reset.

Industry observers have speculated that AI hype may have scared buyers away from new software deals. IBM rejects that narrative, arguing that the delay is strategic, not reactive. „The market is not rejecting AI,” the spokesperson added. „Clients simply need time to align their hardware with AI workloads.”

Critics argue that the excitement around generative AI could have inflated expectations, leading to cautious spending. However, IBM points to concrete budget allocations as the primary driver. The company plans to bundle software licences with hardware upgrades to smooth the purchasing process and accelerate adoption.

Looking ahead, IBM predicts a resurgence of software sales once hardware refreshes are complete. The firm is developing integrated solutions that combine infrastructure and AI‑enabled applications, aiming to reduce the lag between hardware deployment and software licensing. If the trend holds, the delayed deals could translate into a stronger, more sustainable revenue stream for IBM and its clients.

Frequently Asked Questions

Why are software deals being postponed? Clients are directing limited IT budgets toward essential hardware upgrades, which temporarily reduces the funds available for new software licences.

Is AI failing to attract buyers? IBM says no. The delay reflects budgeting priorities, not a lack of interest in AI. Companies plan to adopt AI software after completing hardware refreshes.

What will IBM do to revive software sales? The company intends to offer bundled packages that align hardware purchases with software licences, making it easier for customers to adopt AI solutions once their infrastructure is ready.