IBM: AI Just Exposed A Bigger Problem

International Business Machines Corporation reported a significant Q2 revenue miss, with $17.2B vs. $17.86B consensus, and adjusted EPS of $2.93 below expectations. IBM's segment performance deteriorated: Software growth slowed to 5%, Consulting was flat, and Infrastructure declined 7%, raising concerns about broad-based demand weakness. AI infrastructure spending is benefiting hardware and data center suppliers more than IBM, intensifying competition for customer budgets and clouding IBM's AI growth narrative. I maintain a Hold rating on IBM stock, awaiting the July 22 earnings call for clarity on deal timing, software growth trajectory, and the credibility of full-year guidance.