IBM and Nokia pivot to AI-driven revenue models as mainframe demand falls

IBM warned shareholders that spending on its traditional mainframe systems is declining as customers redirect budgets toward AI chips, memory and GPU storage. In a letter to investors, CEO Arvind Krishna said revenue for Q2 2026 is expected to rise modestly by about 1% to $17.2 billion, with software sales up 5% and infrastructure revenues down 7%. The company noted the upcoming launch of its Z17 mainframe but highlighted the broader industry shift toward AI‑powered data‑center hardware.

Nokia, which exited the mobile handset market in 2014, has seen its share price nearly double since early 2024 thanks to a strategic focus on AI‑related telecom infrastructure. The Finnish firm purchased Infinera for roughly $2.3 billion, boosting its U.S. optical‑transport market share to about 27% and making it the second‑largest player after Ciena. Nvidia invested about $1 billion for a near‑3% stake, underscoring the importance of Nokia’s switches, routers and optical‑transport equipment in modern AI data centers.