IBM CEO Arvind Krishna speaks at the SXSW conference in Austin, Texas, on March 11, 2025.
Andy Wenstrand | Sxsw Conference & Festivals | Getty Images
International Business Machines CEO Arvind Krishna told CNBC on Wednesday that the Iran war and other geopolitical uncertainty are leading the company to guide cautiously.
IBM beat analyst first-quarter earnings estimates on the top and bottom lines, but maintained guidance due to the macro uncertainty.
“Is there going to be an issue around oil as inflation goes up? Will that drive people to spend a bit less? If they spend a bit less, it’s not a direct impact on me, but a lot of consumer companies are my clients, like Walmart. If people are buying less at Walmart, they’re going to find a way to control their costs, so then they’ll buy less,” he said.
Krishna noted that despite the Iran conflict, IBM’s Middle East business did well.
The company reported first-quarter revenue of $15.92 billion, beating the $15.62 billion consensus estimate from LSEG. Earnings per share came in at an adjusted $1.91, 10 cents better than expectations. Software beat, with Red Hat growth rebounding to 10%.
Krishna said he is also cautious about growth concerns in Europe.
“That’s the only place where I think there is some squinting because it is also a little bit of jadedness, right? You had the Covid shocks, you had the Ukraine war. So they’ve gone through these shocks a few times, and they actually come out okay. I think this time around is an open question,” Krishna said.
“I don’t think anyone will know the answer for another month or two,” he added.
Mythos
“Somebody does a thing. It looks magical. It looks wonderful. We think it’s the only thing. Three months later, somebody copies it and actually does it better,” he said.
“I’d be surprised if somebody else hasn’t already done it but hasn’t bothered to claim it,” he added.
IBM shares plunged in April after the AI startup said its Claude Code tool could modernize legacy systems that run Common Business-Oriented Language. COBOL is a code system developed in the late 1950s that is regularly used in business data processing.
The release of Mythos triggered a surprise meeting between Treasury Secretary Scott Bessent and Fed Chair Jerome Powell with the heads of the top U.S. banks over AI cyber concerns. Bessent and Vice President JD Vance held a call with tech CEOs like Anthropic’s Dario Amodei, OpenAI’s Sam Altman, xAI’s Elon Musk and others about the same matter.
“It’s a very big conversation, and there is no question that it can find and exploit vulnerabilities at a rate and pace that has not been seen so far,” Krishna said.
