IBM reported a first-quarter revenue increase that fell short of expectations, driven by weakness in its software segment. The shares slid 6.5% in after-hours trading on April 22. Investors are wary that AI tools—capable of automating routine corporate tasks—could eat into IBM’s traditional software sales, a concern that surfaced after sluggish license renewals and slower growth in cloud services. On the post-earnings call, CEO Arvind Krishna said the company saw “its strongest growth in decades” in the Middle East, even as regional tensions rose after the Strait of Hormuz closure. He added that IBM could weather another few weeks of disruption in that critical shipping lane. Despite the cautious outlook on software, IBM aims to lean into hybrid cloud and AI partnerships, pointing to longer-term deals signed with clients this quarter.