IBM CEO: Fears about AI bubble are overblown

Core Viewpoint - IBM is planning to lay off a small percentage of its workforce while simultaneously expecting to increase net hiring over the next 12 months, focusing on college graduates with skills in AI and quantum technology [1][2][3][5]. Workforce Changes - The layoffs are part of a workforce rebalancing strategy as the company becomes more productive, with excess positions being eliminated and new roles created in areas aligned with client needs [3][4][5]. - IBM aims to hire more college graduates, believing that AI tools can enhance their capabilities to match experienced employees after a short training period [5]. AI and Market Concerns - Concerns about AI's impact on jobs are acknowledged, but IBM's CEO believes the fears are overblown, asserting that the company will continue to innovate in AI, quantum, and cloud technologies [6][7]. - Over the last nine quarters, IBM has generated a $9.5 billion business in AI, indicating strong client interest despite a slower-than-expected adoption rate [8][9]. Financial Performance - IBM has successfully reinvested over two-thirds of the $3.5 billion saved from operational efficiencies into R&D and technical skills, contributing to an increase in overall margins and cash returns to shareholders [10][11]. - The company's software revenue has grown from 22% to 45% over the past five years, with margins increasing by more than five points during the same period [11]. Competitive Landscape - IBM views major tech companies like Google and Microsoft as partners rather than competitors, collaborating on AI models rather than competing to build large models [12][13]. - The company plans to develop smaller, purpose-built AI models tailored to specific tasks, which are expected to be more accurate and less prone to errors [14].