IBM (IBM)

Hybrid-cloud + enterprise AI/data (Red Hat/watsonx) + consulting + mainframes — enterprise IT backbone

AI exposure 11% — derived from reported segment revenue, not asserted.

Where it sits

Software Stack → Data & Infrastructure Software · figures rebased to Q2 2026, reported 2026-07-22

No business is a majority here. Hybrid-cloud software (Red Hat/OpenShift) + automation + data/AI (watsonx) + security is 45% of revenue, ahead of Enterprise & Business Software at 32% — placement rule 2 puts the primary with the largest business, so Data & Infrastructure Software. The rest is tagged separately: Enterprise & Business Software at 32%; Storage & Server Systems at 23%.

Also tagged: secondary in Software Stack → Enterprise & Business Software; secondary in Physical Infrastructure → Storage & Server Systems.

Reported segments

Software — 45.1% of revenue
Consulting — 31% of revenue
Infrastructure (mainframe) + financing — 22.3% of revenue
Other / financing residual — 1.6% of revenue

IBM ($17.2B Q2 2026). Software 45.1% ($7.76B, +5.1% — Red Hat +11%, data +19%, automation +4%, transaction processing -8%) = primary B5 Data & Infrastructure Software; Consulting 31.0% ($5.33B, +0.2% — Strategy and Technology $2.9B, Intelligent Operations $2.4B) = B5 Enterprise & Business Software secondary; Infrastructure 22.3% ($3.84B, -7.4%) = B2 Storage & Server Systems secondary, where IBM Z fell 42% on the product cycle while distributed infrastructure grew 37%. Closed the $11.6B Confluent acquisition in the quarter.

How the 11% is built

Software — 45.1% of revenue × 12% AI-driven (disclosed). watsonx and the data platform are AI-linked, but Red Hat, automation and transaction processing are conventional enterprise software
Consulting — 31% of revenue × 15% AI-driven (disclosed). Generative-AI implementation work is the fastest-growing book inside an otherwise flat consulting business
Infrastructure (mainframe) + financing — 22.3% of revenue × 5% AI-driven (disclosed). zSystems is transaction processing rather than AI compute; the distributed infrastructure growing 37% is the AI-adjacent part
Other / financing residual — 1.6% of revenue × 5% AI-driven (estimate). residual

Investment read

Moat. Enterprise installed base plus hybrid cloud (Red Hat +11%, HashiCorp at record bookings), the mainframe franchise, consulting relationships, and now Confluent — $11.6B for the leader in Kafka-based streaming, bought to address the data-freshness problem blocking enterprise AI deployment. Software ARR $24.6B, 80% recurring, with the quantum programme still a research option rather than a business.

Bottleneck / pricing power. Moderate, and Q2 2026 showed where it is thinner than it looked: software grew 5% against a 10%+ guide and ARR growth decelerated from 11% to 8% as soon as the z17 cycle rolled over (IBM Z -42%). A meaningful share of the software 'annuity' is mainframe-attached Transaction Processing rather than standalone. Red Hat and the AI/data stack are the growth vectors and both are contested.

Role in the AI stack. The enterprise hybrid-cloud + AI-services + mainframe layer.

Connected companies

Microsoft (MSFT) — IBM supplies: hybrid-cloud (Red Hat OpenShift) runs across Azure
Advanced Micro Devices (AMD) — IBM is supplied by: IBM Cloud adds MI300X for watsonx AI inferencing
Dell Technologies (DELL) — IBM competes with: Overlap in enterprise storage arrays (PowerStore/PowerMax vs IBM FlashSystem); minimal server overlap given IBM's mainframe/Power focus
Oracle (ORCL) — IBM competes with: IBM Consulting and broad enterprise IT overlap with Oracle, but IBM lacks packaged ERP/CRM apps to rival Oracle Fusion directly
Broadcom (AVGO) — IBM competes with: Hybrid/private cloud — VMware VCF vs Red Hat OpenShift
Accenture (ACN) — IBM competes with: IT consulting / systems integration rivalry — Accenture vs IBM Consulting
CoreWeave (CRWV) — IBM is supplied by: compute capacity for IBM Granite model training

Others in Data & Infrastructure Software

All 174 companies · What moved this quarter · How the map is built