IBM Warns AI Infrastructure Spending Is Squeezing Software Budgets, Triggering Historic Stock Plunge And Raising Fresh Concerns For Enterprise Tech

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July 16, 2026

IBM has delivered one of the clearest warnings yet that the artificial intelligence investment boom is reshaping corporate technology spending, saying customers are diverting billions of dollars from software projects to secure scarce AI infrastructure.

The warning sent its shares tumbling and rattled the broader software sector.

The technology giant said it had “faltered” in keeping pace with the rapid shift in enterprise spending toward AI infrastructure, forecasting weaker-than-expected second-quarter revenue and earnings after large customers redirected capital expenditure to servers, storage systems, networking equipment and memory chips.

The warning wiped about 25% off IBM’s share price on Tuesday, putting the stock on track for its worst single-day decline since the 1987 Black Monday market crash. At those levels, the company was poised to lose roughly $70 billion in market value from its capitalization of $272.8 billion, while the sell-off spread across the enterprise software sector.

Shares of Microsoft, ServiceNow, Salesforce and Intuit all fell between 2% and 5% as investors reassessed whether the AI investment cycle is cannibalizing spending on traditional enterprise software.

IBM Chief Executive Arvind Krishna said the spending shift accelerated unexpectedly during the final weeks of June as customers rushed to secure hardware before anticipated price increases and ongoing supply shortages.

“In the last few weeks of June, we saw clients shift their quarterly capex spend toward servers, storage, and memory purchases to secure supply-constrained infrastructure ahead of expected price increases,” Krishna said in a letter to investors.

“While we anticipated some supply-chain related impact in our expectations, we did not anticipate the magnitude of the capex reprioritization.”

Krishna added that numerous large customer contracts expected to close before the end of the quarter were delayed as companies redirected budgets toward AI infrastructure purchases.

The comments suggest enterprises are making difficult trade-offs rather than simply increasing overall technology spending. Instead of expanding IT budgets across all categories, many organizations are postponing software upgrades and consulting projects to ensure they secure access to scarce AI computing resources.

IBM’s warning provides another indication that the AI boom has entered a new stage. During the early phase of generative AI, software companies benefited from enthusiasm surrounding AI-powered applications and productivity tools. Now, however, investment appears increasingly concentrated on the physical infrastructure required to train and deploy AI models.

Cloud providers, governments, and enterprises are investing hundreds of billions of dollars in graphics processors, high-bandwidth memory, advanced networking equipment, storage systems, and data centers. With supply still constrained, companies are prioritizing securing hardware even if it means delaying spending elsewhere.

Recent earnings from companies across the semiconductor supply chain have reinforced that trend. TSMC, ASML, Samsung Electronics and SK Hynix have all reported exceptionally strong demand driven by AI infrastructure expansion, while hardware suppliers continue to announce capacity increases to meet customer orders extending well into the coming years.

IBM’s results suggest those gains are increasingly coming at the expense of parts of the enterprise software market.

Mainframe Business Bears The Brunt

IBM said the weakness was concentrated in its mainframe division, which supplies high-performance computing systems used by banks, airlines, insurers and governments to process millions of daily transactions. The company has spent years attempting to reduce its dependence on the cyclical mainframe business by expanding higher-margin software offerings, particularly through Red Hat following its $34 billion acquisition in 2019.

However, even those efforts were insufficient to offset customers’ sudden reallocation of spending toward AI infrastructure.

The warning indicates that even large enterprises with mission-critical IT systems are delaying software purchases while prioritizing investments viewed as essential for competing in the AI era.

While software spending generally weakened, IBM said cybersecurity remained a priority as businesses respond to increasingly sophisticated AI-powered cyber threats. The company pointed to growing concerns following advances in AI systems capable of identifying software vulnerabilities and exposing weaknesses in existing security infrastructure.

Organizations are therefore continuing to allocate capital toward cybersecurity even while delaying other software investments, making security one of the few segments of enterprise technology that continues to attract strong spending alongside AI infrastructure.

IBM forecast second-quarter revenue of approximately $17.2 billion, representing annual growth of just 1% and falling short of analysts’ consensus estimate of $17.86 billion, according to LSEG.

If realized, the performance would mark the company’s weakest revenue growth in more than a year.

The company also projected adjusted earnings of $2.93 per share, below Wall Street’s expectation of $3.02 per share.

The disappointing outlook amplified investor concerns that IBM’s business transformation remains vulnerable to shifts in enterprise technology spending.

Analysts said IBM’s warning could signal broader challenges across enterprise software.

“This is an ugly moment for IBM and software stocks,” said Chris Beauchamp, chief market analyst at IG Group.

“The big question will be how long the shift to infrastructure and cybersecurity lasts. A few more months might be bearable, but more than that and serious questions will be asked all over again about software stocks.”

The concern extends beyond cyclical spending patterns. Software companies are simultaneously confronting two structural pressures: customers are reallocating budgets toward AI infrastructure, while AI itself is beginning to automate software development, coding, and other enterprise workflows.

That combination has raised questions about how quickly software vendors can generate returns from their own AI investments.

Betting on Quantum Computing

Seeking to reassure investors, IBM highlighted its longer-term strategy centered on quantum computing, where it has committed more than $10 billion toward building the first large-scale commercial quantum computer by 2029.

Interest in quantum computing has increased following U.S. government efforts announced in May to strengthen domestic quantum technology supply chains, with IBM among the companies expected to play a leading role.

IBM also continues expanding partnerships in artificial intelligence, including collaborations with OpenAI, as it seeks to position itself in the next generation of enterprise computing.

However, those initiatives remain in their early stages and are not yet generating enough revenue to offset weakness in IBM’s traditional businesses.

IBM’s announcement weighs heavily because it offers one of the first concrete examples of how the AI infrastructure race is reshaping enterprise technology spending. Rather than lifting all segments of the industry equally, the boom is creating clear winners and losers.

Semiconductor manufacturers, equipment makers, memory suppliers and data center operators continue to benefit from record demand as organizations race to build AI capabilities. Meanwhile, parts of the software industry now face the prospect that customers will defer upgrades and new deployments until the current infrastructure buildout stabilizes.

Oil Climbs as U.S. Escalates Iran Strikes, Dollar Steadies, Gold Falls, and Treasury Yields Drop After Soft Inflation Data

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Samuel Nwite

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July 16, 2026

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Oil prices edged higher in volatile trading on Wednesday after the United States launched another wave of military strikes against Iran and reinstated a naval blockade of Iranian ports, reigniting concerns over crude supplies from the Middle East.

U.S. West Texas Intermediate crude for August delivery rose 0.45% to $79.70 a barrel, while Brent crude for September delivery gained 0.68% to $85.31 a barrel as investors weighed the growing geopolitical risk premium against softer-than-expected U.S. inflation data.

The latest advance followed a significant escalation in the conflict after U.S. Central Command (CENTCOM) said American forces carried out a seven-hour operation targeting dozens of Iranian military sites near the Strait of Hormuz and along the country’s southern coastline.

According to CENTCOM, the operation involved fighter aircraft, naval vessels and unmanned aerial systems that struck missile launch sites, drone facilities, naval assets and coastal defense infrastructure used by Iran to threaten commercial shipping.

The strikes came hours after Washington reinstated a naval blockade covering vessels traveling to and from Iranian ports, marking a renewed effort to restrict Tehran’s maritime operations after the collapse of last month’s interim ceasefire agreement.

CENTCOM Commander General Brad Cooper said Iran had deliberately targeted civilian shipping during the previous week, attacking seven commercial vessels and leaving about a dozen crew members dead, injured, or missing.

The latest military developments have significantly reduced expectations that normal shipping through the Strait of Hormuz will resume anytime soon.

“The latest escalation shows how expectations of a rapid opening of the Strait were premature,” said Saul Kavonic, senior energy analyst at MST Marquee.

“The hostilities and reimposed blockade set the conflict back on an escalatory trajectory.”

Kavonic warned that crude prices could revisit $100 per barrel if current military operations continue for several weeks, with the risk of substantially higher prices should attacks spread to oil production facilities or export infrastructure across the Gulf.

The renewed conflict is once again shifting the market’s focus from physical supply balances toward geopolitical risk.

Although some Gulf producers have partially restored exports through alternative routes, the Strait of Hormuz remains the world’s most strategically important oil chokepoint, carrying a significant share of global crude oil and liquefied natural gas shipments. Any prolonged disruption increases transportation costs, tightens physical supplies, and raises insurance premiums for tanker operators.

The military escalation also complicates the inflation outlook for central banks.

Higher energy prices threaten to offset recent progress in reducing inflation, particularly if sustained increases in crude prices begin feeding through to gasoline, diesel, transportation, and manufacturing costs.

Treasury Yields Declined

Those concerns come just one day after U.S. inflation data surprised markets on the downside.

Consumer prices rose 3.5% year over year in June, while the headline Consumer Price Index fell 0.4% on a monthly basis, marking the first monthly decline since April 2020 as energy prices eased during the survey period.

The softer inflation report prompted investors to scale back expectations for another near-term Federal Reserve rate increase.

Treasury yields fell sharply following the data, with the two-year Treasury yield dropping about nine basis points from a 16-month high as traders reassessed the outlook for monetary policy.

“The market was building a conviction that the Fed was going to hike in September and it’s certainly injected a bit of doubt into that now,” said Chris Turner, head of global markets at ING.

He cautioned, however, that policymakers would likely require additional evidence of moderating inflation before abandoning the possibility of further tightening later this year.

“Short-term, these Fed tightening expectations are going to hang around a bit, so I think the dollar can stay stable, depending on what happens with energy prices,” Turner said.

Federal Reserve Chair Kevin Warsh amplified that message during testimony before the House Financial Services Committee, saying the central bank has “no tolerance” for persistently elevated inflation and would remain committed to maintaining price stability despite political pressure.

Markets are now pricing roughly a 65% probability of a September rate increase, while expectations for an increase later this month have largely disappeared.

Dollar Remained Steady

The evolving interest-rate outlook kept the U.S. dollar broadly steady on Wednesday after its largest daily decline in nearly two weeks.

The dollar index, which measures the U.S. currency against six major peers, held around 100.9, while the euro rose 0.1% to $1.1428 and sterling gained a similar amount to $1.3406. Against the Japanese yen, the dollar traded at 162.24.

Currency markets also reacted to slowing economic momentum in China after second-quarter growth slowed to 4.3%, its weakest pace in more than three years. The weaker growth figures strengthened expectations that Beijing could introduce additional fiscal and monetary stimulus to support economic activity.

Gold Fell Again

Meanwhile, precious metals retreated as rising oil prices revived inflation concerns.

Spot gold fell 0.7% to $4,027.49 per ounce after briefly climbing above $4,100 following Tuesday’s softer U.S. inflation report. U.S. gold futures for August delivery declined 0.9% to $4,034.

Analysts said the rebound in oil prices has quickly altered market sentiment by increasing the likelihood that inflation could remain elevated even as broader price pressures begin easing.

“Higher U.S. crude, gasoline and diesel prices will result in high inflation numbers in the next print in August, that could keep the tone of some Fed officials on the hawkish side, which is not helping gold,” UBS analyst Giovanni Staunovo said.

“In the near term, oil and U.S. gasoline prices will continue to influence gold, as they remain key drivers of U.S. inflation.”

Investors are now turning their attention to the U.S. Producer Price Index, which is expected to provide additional insight into pipeline inflation pressures and help determine whether Tuesday’s softer consumer inflation reading represents the beginning of a broader disinflation trend or merely a temporary pause before higher energy prices feed back into the economy.

SBI Funds’ IPO Fully Subscribed as Investors Bet on India’s Expanding Mutual Fund Market

By

Samuel Nwite

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July 16, 2026

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SBI Funds Management’s $1.03 billion initial public offering (IPO) was fully subscribed on the second day of bidding on Wednesday, indicating strong investor confidence in India’s largest asset manager and growing optimism about the country’s rapidly expanding mutual fund industry.

The IPO, which values the company at about 1.17 trillion rupees ($13.6 billion), or roughly 38 times its projected fiscal 2026 earnings per share, attracted bids for approximately 212 million shares against 124.56 million shares on offer by 1:33 p.m. IST, according to exchange data.

Retail investors subscribed to 68 million shares, representing 1.26 times the portion reserved for them, signaling healthy participation from individual investors alongside strong institutional demand.

The offering closes on Thursday, with shares expected to debut on Indian exchanges on July 21.

The IPO follows a successful anchor investor round in which SBI Funds Management raised $278.5 million from marquee global investors, including BlackRock and sovereign wealth funds from Singapore, Abu Dhabi, and Norway. The participation of some of the world’s largest institutional investors has strengthened confidence in the listing and underscores continued international interest in India’s long-term asset management story.

SBI Funds Management, a joint venture between India’s largest lender, State Bank of India (SBI), and European asset management giant Amundi, managed assets worth 12.5 trillion rupees ($131 billion) as of March 2026, making it India’s biggest mutual fund manager by assets under management (AUM).

Investor interest in the IPO reflects growing confidence that India’s mutual fund industry remains in the early stages of a structural expansion, supported by rising household financial savings, increasing participation from first-time investors and the continued shift away from traditional savings products toward market-linked investments.

One of SBI Funds Management’s biggest competitive advantages is its extensive nationwide distribution network through State Bank of India, which has more than 22,000 branches and one of the country’s largest customer bases. That gives the asset manager unparalleled access to retail investors across both metropolitan and smaller cities.

Analysts say this footprint has become increasingly valuable as India’s mutual fund industry expands beyond major financial centers.

“Smaller cities are contributing more heavily to growth in assets under management for fund managers, and that puts SBI Funds Management in a strong position,” said Ambareesh Baliga, a Mumbai-based market analyst.

The company is also well positioned to capitalize on the sustained growth in systematic investment plans (SIPs), which have become the primary driver of retail participation in Indian equity markets. Monthly SIP inflows have remained resilient even during periods of market volatility, helping India’s mutual fund industry record 64 consecutive months of net inflows through June 2026.

Industry executives expect continued financialization of household savings, supported by rising incomes, greater digital adoption and expanding financial awareness, to drive further growth in mutual fund assets over the coming years.

The listing marks India’s biggest IPO so far this year and could signal improving sentiment in the country’s primary market after fundraising activity slowed during the first half of 2026.

Earlier in the year, higher crude oil prices following the Iran conflict weighed on investor sentiment and raised concerns about inflation, India’s import bill, and economic growth, leading several companies to delay listing plans.

Market participants now expect IPO activity to accelerate in the second half of 2026 as geopolitical tensions ease and equity markets remain near record highs.

The SBI Funds Management offering is widely viewed as a bellwether for investor appetite ahead of several anticipated blockbuster listings, including those of Reliance Jio and the National Stock Exchange (NSE), both expected before year-end.

The strong response also boosts India’s standing as one of the world’s most active equity capital markets, supported by robust domestic liquidity, increasing retail participation and continued foreign institutional interest despite global economic uncertainty.

Welcome Ikechukwu N. S. Dozie, New VC of FUTO

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Ndubuisi Ekekwe

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July 16, 2026

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Great FUTOites,

Please join me in congratulating and welcoming our new Vice Chancellor, Professor Ikechukwu N. S. Dozie, as he assumes the responsibility of leading our great institution to even greater heights.

Our immediate past Vice Chancellor, the distinguished Professor Nnenna Oti, elevated service, leadership, and institutional excellence to an enviable level, earning FUTO widespread respect across Nigeria. I am confident that Professor Dozie will build on that remarkable foundation and further strengthen FUTO’s reputation on the global stage.

I have already exchanged messages with our new Vice Chancellor, and I conveyed a simple commitment: “We are here whenever there is anything you may need from us.”

To fellow FUTOites around the world, if you are in a position to facilitate international partnerships, research collaborations, faculty exchanges, industry engagements, innovation programs, or global opportunities, remember that there is FUTO. Let it be your first option. If there is any way I can help create connections or facilitate introductions, please let me know. Together, we can continue to open new doors for our alma mater.

For me, everything began at FUTO, Africa’s finest university of technology by far! lol. I arrived from my Ovim village with dreams, but it was FUTO that began the true liberation of my mind. It provided exactly the right intellectual environment, delivered at exactly the right time. Looking back, I can only say: thank you, FUTO, for a peerless academic experience.

I still remember one of my earliest lectures by Rev. Fr. Prof. Ashiegbu on Logic and Philosophy. His opening exploration of the timeless question – “What is the world made up of?” – was transformative. At that moment, I realized I was no longer a student of Secondary Technical School Ovim. I had entered a different world. I had become an undergraduate, embarking on a lifelong journey of inquiry, discovery, and innovation.

That is the enduring mission of a great university: not merely to transmit knowledge, but to liberate minds. Professor Dozie, together with the faculty and staff, now carries that noble responsibility, to inspire the next generation of engineers, scientists, innovators, entrepreneurs, and leaders who will shape Nigeria, Africa, and the world.

We wish him wisdom, strength, and tremendous success as he leads our beloved university into its next chapter.

Great FUTOites.

The Greatest. And Still the Greatest.

Stripe and Advent Make $53bn Bid For Paypal In Blockbuster Fintech Deal as Payments Industry Enters New Consolidation Phase.

By

Samuel Nwite

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July 16, 2026

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Stripe and private equity giant Advent International have made a joint offer to acquire PayPal Holdings for $60.50 per share, valuing the pioneering digital payments company at more than $53 billion in what would rank among the largest financial technology acquisitions on record.

According to sources cited by Reuters, the proposal was submitted earlier this month and is backed by roughly $50 billion in committed bank financing, underscoring lenders’ confidence in one of the largest leveraged buyouts attempted in recent years. The offer represents a premium of about 28% to PayPal’s Tuesday closing price, sending the company’s shares up more than 16% in premarket trading as investors assessed the likelihood of a transaction.

Neither PayPal, Stripe, nor Advent International commented on the discussions.

The approach follows an initial proposal made in early April, the sources said. While PayPal has yet to formally respond, Stripe and Advent are seeking to advance negotiations over the coming weeks. The sources cautioned that there is no guarantee the talks will result in a deal.

Unlike many private equity acquisitions that involve selling businesses separately, the proposal would keep PayPal intact. Stripe and Advent would jointly own the company, each taking an equal stake, signaling confidence that PayPal’s long-term value lies in integrating its businesses rather than dismantling them.

If completed, the acquisition would unite two of the most influential names in digital payments. Stripe has become the dominant payment infrastructure provider for internet businesses, while PayPal remains one of the world’s largest consumer payments platforms through its core checkout business, Venmo, Braintree, and expanding cryptocurrency services.

The combination would create a payments ecosystem spanning merchants, consumers, online marketplaces, subscription businesses and cross-border commerce, potentially giving the combined company greater scale to compete with technology giants such as Apple Pay and Google Pay as well as traditional card networks including Visa and Mastercard.

The proposed acquisition also shows how dramatically PayPal’s valuation has changed over the past five years.

Once regarded as one of the biggest beneficiaries of the pandemic-driven e-commerce boom, PayPal reached a market capitalization of roughly $360 billion in 2021. Since then, slowing online spending, rising interest rates, intensifying competition, and investor concerns over long-term growth have erased much of those gains. The company’s value fell to about $36 billion earlier this year and has declined more than 40% over the past 12 months.

That steep correction has transformed PayPal from a former market leader into a potential takeover candidate, particularly for strategic buyers seeking an established global payments franchise with hundreds of millions of users.

Stripe appears well positioned to pursue such a transaction. The privately held company was valued at $159 billion during a secondary share sale earlier this year, reflecting renewed investor optimism after a difficult period for fintech valuations. Its payments infrastructure is deeply embedded across internet commerce, serving millions of businesses that rely on its software to process payments, automate financial operations and manage online transactions.

For Advent International, one of the world’s largest private equity firms, the transaction would underpin another major investment in financial technology. The firm already has significant exposure to payments through investments, including Nuvei, and has extensive experience scaling software and financial services companies.

The proposed acquisition comes as PayPal is undergoing one of the most significant restructurings in its history. Chief Executive Enrique Lores, who assumed the role in March, has launched an aggressive turnaround strategy aimed at restoring growth and improving profitability after several years of slowing expansion.

In April, PayPal reorganized its operations into three core divisions covering checkout services, Venmo and consumer financial services, and payments and cryptocurrency. The company also reshaped its senior leadership team as part of a broader effort to simplify operations and accelerate decision-making.

Artificial intelligence has become a central pillar of the turnaround. Management plans to deploy AI across customer service, software development, and internal operations while eliminating overlapping functions throughout the organization. The company expects these initiatives to generate approximately $1.5 billion in savings over the next two to three years, with the proceeds reinvested into new products and growth initiatives.

Early operational indicators suggest the strategy is gaining traction. First-quarter revenue rose 7% year over year to $8.35 billion, surpassing analysts’ expectations of $8.05 billion. On a currency-neutral basis, total payment volume increased 8% to approximately $464 billion, demonstrating that PayPal continues to process enormous transaction volumes despite mounting competition.

The potential transaction also points to a broader consolidation wave sweeping through the global payments industry.

As digital payments mature, companies are increasingly pursuing mergers to gain scale, reduce costs and expand into faster-growing businesses such as business-to-business payments, embedded finance, cross-border transactions and AI-powered financial services.

Competitive pressure has intensified as technology companies, fintech startups, and traditional financial institutions all compete for payment volumes. Consumers now have a wider range of payment choices than ever before, including digital wallets, real-time payment systems, buy now, pay later products, and cryptocurrencies.

Recent transactions underscore that shift. Global Payments agreed to acquire Worldpay from FIS and GTCR in a $24.25 billion transaction, while Canadian payments company Nuvei agreed to purchase Payoneer Global for $2.75 billion. Meanwhile, Mastercard is reportedly exploring options for its UK payments subsidiary Vocalink as governments place greater emphasis on domestic ownership of critical financial infrastructure.

A PayPal acquisition by Stripe and Advent would be significantly larger than those deals and could become the defining fintech transaction of the decade. But beyond its size, the proposed takeover highlights a broader evolution in the payments industry. The next phase of competition is increasingly being driven by artificial intelligence, integrated financial services, and global payment ecosystems rather than traditional transaction processing alone.

Acquiring PayPal would instantly add to Stripe, one of the world’s largest consumer payment networks, the Venmo platform, a vast merchant base, and established global brand recognition. Combined with Stripe’s strength among developers and enterprise merchants, the deal could create one of the industry’s most comprehensive payment platforms.

For PayPal shareholders, the proposal offers an opportunity to realize substantial value after years of declining share performance, while providing the company with the financial backing to accelerate investments in artificial intelligence, digital wallets, merchant services and next-generation payment technologies outside the scrutiny of public markets.

If negotiations progress, the transaction is likely to face extensive regulatory scrutiny given the combined companies’ significant presence in digital payments.