IBM CEO Talks Confluent Acquisition and AI Impact

Summary

Podcast Summary: IBM CEO Talks Confluent Acquisition and AI Impact

Podcast: Bloomberg Talks
Host: Caroline (Bloomberg)
Guest: Arvind Krishna (CEO, IBM)
Date: March 17, 2026

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Episode Overview

In this episode, Bloomberg’s Caroline interviews IBM CEO Arvind Krishna following the swift completion of IBM’s acquisition of Confluent. The discussion centers on the importance of data speed and real-time analytics in the era of AI, IBM’s focused strategy on hybrid cloud and automation, partnerships such as the deepened collaboration with Nvidia, and the tangible business impact of AI and automation. The conversation also touches on workforce implications, the geopolitical climate, consulting growth prospects, and IBM’s continued investment and progress in quantum computing.

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Key Discussion Points & Insights

1. The Strategic Importance of Confluent for IBM and AI

[00:32–01:28]

• Data Speed in AI: Arvind Krishna highlights Confluent’s role in moving enterprise data in real time for analytics and feeding AI agents.
  • “Moving data in real time so that it gets available both for the enterprise, for analytics, but more importantly for AI agents...is why it is so exciting to get it done.” – Arvind Krishna [00:52]
• Quicker Deal, Friendlier Regulations: The Confluent deal closed in under four months, signaling a friendlier regulatory environment compared to previous years.
• Hint at More M&A: Krishna keeps options open regarding further acquisitions, hinting, “Watch this space.” [01:38]

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2. IBM’s Acquisition and Innovation Strategy

[01:47–02:41]

• Focus Areas: Hybrid cloud, AI, and automation are central; growth is targeted through both organic innovation (mainframe modernization, new AI offerings) and targeted acquisitions like Confluent.

• Hybrid Approach: They look for properties that enhance their portfolio and where IBM can increase the acquired company’s growth rate.

  “Our sweet spot is going to be hybrid cloud. AI automation are the areas where we are very, very focused on M and A activities as well as organic development.” – Arvind Krishna [01:47]

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3. Deepened Partnership with Nvidia & Customer Impact

[02:41–03:47]

• Fivefold Data Acceleration: Integration with Nvidia GPUs and WatsonX data delivered a “five times speed up” for clients like Nestle—not just incremental, but exponential improvement.

• Open Source Collaboration: Technologies like Presto were spotlighted as part of these client solutions.

  “…together we managed to get that speed up across massive amounts of data…we are very excited. We’re going to do more work on that and then take it into the market…” – Arvind Krishna [03:18]

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4. AI’s Real Business Value: Model Agnosticism and ROI

[03:47–05:00]

• Model Integration: IBM is “model agnostic”, helping clients combine best-of-breed models from different providers (Anthropic, OpenAI, open source, etc.).

• Enterprise Focus on ROI: 2026 is projected as the “year when enterprises are going to be focused and obsessive on ROI” from AI investments.

  “Our goal has always been that we want to help our clients integrate the best capabilities from where they come…to some extent we are model agnostic.” – Arvind Krishna [04:05]

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5. Competition with Other AI Providers and Investor Sentiment

[05:00–05:48]

• Misunderstanding in Media & Markets: Krishna addresses investor concerns post-Anthropic’s blog on COBOL, calling it a “misunderstanding” and insisting it is a tailwind for IBM, not a threat.

  “I actually am convinced is the tailwind for us. It’s not a mixed half headwind, half tailwind. It is a tailwind for us…” – Arvind Krishna [05:16]

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6. Workforce Reshaping and the Impact of AI on Jobs

[05:48–07:22]

• Productivity and Reinvention: AI and automation delivered $4.5B in savings; most reinvested in R&D, sales, and client engineering. Workforce reshape doesn’t mean shrinkage; IBM committed to increasing entry-level hires 2–3x year over year.

• Job Displacement Estimate: Krishna reiterates workforce displacement will be around 5–10%, and IBM is only halfway through that transformation, but emphasizes stable overall employment with re-skilling and upskilling.

  “There is a reshaping of the workforce, but there isn’t a net decrease.” – Arvind Krishna [06:05]
  “There will be more opportunities but you’ve got to be willing to upskill yourself and retrain yourself.” – Arvind Krishna [07:15]

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7. Geopolitical Environment and Consulting Business

[07:22–08:28]

• Middle East Instability: About 20% of IBM staff in the region are disrupted due to unrest, but it’s expected to have only a minor short-term effect unless prolonged. The Middle East remains a small percentage of IBM’s total business.

  “…about 20% of the people in the Middle east…are disrupted…If this goes on for many more months, then I do think that we will take a slight headwind.” – Arvind Krishna [07:30]

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8. Consulting Sales Growth Outlook

[08:28–09:09]

• Turning Point Predicted: Krishna expects slow improvement and possible slight growth in consulting during the first half of the year, with more significant growth anticipated in the second half.

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9. Progress in Quantum Computing

[09:09–10:40]

• On Track for 2029: IBM aims for a fault-tolerant quantum supercomputer by 2029, with steady progress on qubits, error correction, and integration into data centers.

• Real-World Use Cases: Quantum processors are being used at Cleveland Clinic and HSBC for medical research and bond pricing.

• Academic & Institutional Partnership: Collaborations with MIT, RPI, University of Illinois, and national labs accelerate tangible achievements.

  “We put out a roadmap for quantum centric supercomputing that has gotten a lot of attention. Our partnerships with academia, with institutions…I’m so excited by what we’re doing…” – Arvind Krishna [09:50]
  “People are now realizing this is not science fiction, this is not engineering to get through the next two to three years.” – Arvind Krishna [10:29]

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Notable Quotes & Memorable Moments

• “Watch this space.” – Arvind Krishna [01:38] (on future M&A)
• “Five times, not 5%, not a little amount, but five times [the speed].” – Arvind Krishna [02:58]
• “2026 is the year when enterprises are going to be focused and obsessive on ROI…” – Arvind Krishna [04:15]
• “There is a reshaping of the workforce, but there isn’t a net decrease.” – Arvind Krishna [06:05]
• “We will do two to three times as much entry level meaning college hires this year as we did last year. Wow.” – Arvind Krishna [06:31]
• “People are now realizing this is not science fiction, this is not engineering to get through the next two to three years.” – Arvind Krishna [10:29]

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Key Timestamps for Segments

• [00:32–01:28] – Confluent acquisition, speed and data strategy
• [01:47–02:41] – IBM’s acquisition philosophy and focus
• [02:41–03:47] – Nvidia partnership and client impact
• [03:47–05:00] – Model agnosticism and AI ROI in business
• [05:00–05:48] – Addressing media and investor misconceptions
• [05:48–07:22] – Workforce impact, AI and automation at IBM
• [07:30–08:28] – Geopolitical environment’s effect on business
• [08:38–09:09] – Consulting growth outlook
• [09:09–10:40] – Quantum computing progress

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Summary

This episode delivers a comprehensive look at IBM’s evolving tech and business strategy under CEO Arvind Krishna. The conversation balances corporate agility (M&A and partnerships), pragmatic AI adoption, workforce modernization, and bold commitments to quantum computing, all while responding candidly to market pressures and geopolitical complexities. IBM emerges as a company doubling down on integrated, ROI-driven AI while preparing for the next computing revolution.

Transcript

[IBM Representative]

The thing about AI for business, it may not automatically fit the way your business works. At IBM we've seen this firsthand. But by embedding AI across hr, IT and procurement processes, we've reduced costs by millions, slash repetitive tasks, and freed thousands of hours for strategic work. Now we're helping companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business. IBM,

[Bloomberg Host (Caroline)]

Bloomberg Audio Studios Podcasts, Radio News Arvind Krishna joins us. It is a joy to have you on our network. And look, speed is the name of the game. This deal has completed swiftly and indeed Confluent is all about speed and data analysis. How is that important in this age of AI?

[Arvind Krishna]

Yeah, so Caroline is great to be here with you and on Bloomberg. So just look at what Confluent does. Moving data in real time so that it gets available both for the enterprise, for analytics, but more importantly for AI agents. And doing that in a way that is the most capable product in the world is why it is so exciting to get it done. And your point on speed? I think the regulatory environment is definitely friendlier where we got this done in just under four months, whereas it used to take a lot longer a few years back.

[Bloomberg Host (Caroline)]

If regulatory environment is friendlier, should you be doing more of it? Should there be more M and A particularly with some beaten up overall valuations of software companies at the moment?

[Arvind Krishna]

I just say watch the space.

[Bloomberg Host (Caroline)]

Oh, watch this space. Okay, but where would you want to add on in this moment? I mean what would make sense to be adding to your portfolio?

[Arvind Krishna]

So we are very focused hybrid, cloud and AI and the intersection. So if you look at Confluent, some of the data is in cloud, some of the data is in SAS properties, some of the data is on premise. An agent needs to get hold of it wherever. So that's the hybrid piece combined with the piece. Our sweet spot is going to be hybrid cloud. AI automation are the areas where we are very, very focused on M and A activities as well as organic development. If you look at what we have done around our what's the next product products, what we have done around our mainframe modernization, these are all things that we have built organically but then we supplement it with with targeted acquisitions where the multiple makes sense but it fits our strategy and where we can normally increase the growth rate of the target property, which we certainly hope to do in the confluent case.

[Bloomberg Host (Caroline)]

Let's talk about what's in X a little bit. Let's look More at partnerships because of course that's what was announced. A little bit more of a deeper partnership with Nvidia yesterday helps your stock. We're seeing expanded collaboration. Again, this is about faster data analys, but cheaper, more, more effective. How does that help you seal more deals?

[Arvind Krishna]

Yeah, so in that one actually the work we're doing together with Nvidia was a five times speed up. So five times, not 5%, not a little amount, but five times. So there we began to leverage the Nvidia GPUs together with some other CUDF or software, combining it with our Watson X data. And the example we used was our client Nestle, where together we managed to get that speed up across a massive amounts of data. And that really is important in that case combining some of the technologies we work on, also an open source with the presto presto data engine, Nvidia and the example at Nestle. But then we are very excited. We're going to do more work on that and then take it into the market and take it out to hundreds of clients from there.

[Bloomberg Host (Caroline)]

You're offering these tools. You're also helping companies like Nestle just embed AI, make sure they're using in the most effective manner possible. When your consultants go in, how much does an essay want to use your offerings, but those of anthropic of open AI, of others, how much do you see that as a competitive force or a competitive threat?

[Arvind Krishna]

Look, our goal has always been that we want to help our clients integrate the best capabilities from where they come. And the word integration comes in here because to some extent we are model agnostic. We believe that our clients are going to use the frontier models from all three or four of the main providers. They're going to use open source models and they're also going to use models from us, though we tend to make much smaller models, but helping them really get value. And I really believe 2026 is the year when enterprises are going to be focused and obsessive on ROI or what they're doing on AI. And so if you take Nestle, how do you take cost out of procurement? How do you take costs out of hr, the finance function, procurement, all of these things. And that's where our consultants and our technologies come together to help them do that, using both technologies from IBM, but also in the case of Nestle, from many other of the partners and the software vendors that they use.

[Bloomberg Host (Caroline)]

So do you think the investor base, and just more broadly your customers as well, see that AI isn't a double edged sword for you but actually that competitive threat that sunk the shares so much on February 23rd was a misunderstanding of what anthropic could do with Cobol.

[Arvind Krishna]

I'm going to be much more straightforward. I believe that the investors and parts of the media misunderstood what that blog said and did. I actually am convinced is the tailwind for us. It's not a mixed half headwind, half tailwind. It is a tailwind for us in terms of how our technology will get adopted in terms of what we do with our clients. And by the way, we had put out tools to convert and modernize COBOL two and a half years ago. So there was no new news in that blog. But they certainly can get a lot of attention.

[Bloomberg Host (Caroline)]

You talk though, what also gets attention is being able to become more productive, take costs out of the business using AI. A lot of people see that as the costs of people. We're seeing block remove 40% of their employee base. You hear about headline after headline. Is that what's going to happen to the labor force?

[Arvind Krishna]

So I'll take ourselves. We've been very public that we have taken four and a half billion dollars out of the enterprise with a mixture of AI and automation. That's a hard number. Now over 3 billion of that got reinvested into the business in more R and D, in more sales, in more marketing, in more delivery, in more what we would call client engineering where clients love the fact that our engineers can work with them to help them solve problems. So there is a reshaping of the workforce, but there isn't a net decrease. And but to put our money where our mouth is, we will do two to three times as much entry level meaning college hires this year as we did last year. Wow.

[Bloomberg Host (Caroline)]

So you're still seeing that demand for that level of technical prowess coming straight out of university of and but I mean you have said in the past, look, you see job displacement, your term and phrase of 5 to 10%. Is that done now at IBM do you think?

[Arvind Krishna]

I think that we are probably halfway down that total journey and I still stick to my total numbers in that range. And I think we are halfway through that journey but our total employment has remained roughly stable. So to the point that I make about there will be more opportunities but you've got to be willing to upskill yourself and retrain yourself.

[Bloomberg Host (Caroline)]

What's not stable is the geopolitical environment often. How is that affecting you? How is that affecting the consulting part of the business in particular?

[Arvind Krishna]

Look, let's acknowledge there's a lot of and disruption that's going on in the Middle east right now. I think we should feel a lot of sympathy for our people. We have thousands of employees in that region. The vast majority, I think are reasonably stable and are getting their work done. There are about 20% of the people in the Middle east who are, who are disrupted, who are not able to get to their clients, who are not able to get the work done. I think within a quarter is going to be very, very minor because most of this work is much more long cycle than short cycle, as in days or weeks. If this goes on for many more months, then I do think that we will take a slight headwind. But in the end of the day, our consulting business in the Middle east is only a few single digit percentages of our total business. So it won't impact IBM stop line and bottom line, but it is going to be impactful to some of our people and some of our clients who are in the region.

[Bloomberg Host (Caroline)]

Thanks for that nuance of, and I'm interested just on the nuance of total sales growth in consulting. Will that come back to growth, do you think, in the near term?

[Arvind Krishna]

I think when I was talking in January and also in October, I felt that the second half of this year will be a lot better on consulting growth than right now. We kind of said that we could see an inflection coming where the first half of last year was negative, the second half of the year turned kind of flattish. I think that we'll see continued improvement in that inflection to maybe slight growth in the first part of the year. But true growth I think is still out in the second half of the year.

[Bloomberg Host (Caroline)]

True growth. True excitement about Quantum always seems to be in the second half of the decade or the millennium. But you really are putting your money where your mouth is when it comes to quantum computing becoming, you know, really tangibly useful by the end of the decade. You want to have a fault tolerant Quantum supercomputer by 2029. How on track are we there? How on track are we to integrating Quantum within the data center?

[Arvind Krishna]

So in all three of your questions, Caroline, I think we are completely on track with what we had said. We said that we are going to have better qubits, better quantum processors, and our processor at the end of last year is now being used whether it's for medical work at Cleveland Clinic, whether it's for bond pricing at hsbc. Those are real use cases that are coming out. We expect to see error correction between this year and next year demonstrated and out there. So that'll be another big plus. We are investing very heavily in how we bring together normal computers and quantum computers. We put out a roadmap for quantum centric supercomputing that has gotten a lot of attention. Our partnerships with academia, with institutions. I'm so excited by what we're doing in Illinois, but also at rpi with MIT and in other places we have done some work with the national labs. This is all tells us how tangible it is and you can feel it. People are now realizing this is not science fiction, this is not engineering to get through the next two to three years.

[Bloomberg Host (Caroline)]

I think I can feel your energy today. Congratulations on the completion the confluent deal and we are staying tuned from any more M and A. Come back on when it happens. IBM, CEO of and Krishnas Great speaking with you.

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