00:00Here's what he had to say about AI's effect on productivity and his outlook on quantum computing.
00:08I'll give you an example. So you can certainly improve productivity of individuals. We'll call
00:13that productivity apps. That's where both economists and CFOs get very concerned. But where's my bottom
00:20line on that? Is it leading to less expense or more revenue? Where is that? And that's hard to
00:25find. But let me give you a second example. And you say, OK, I can see that. We are pretty
00:31acquisitive. Anybody who does M&A, you often bring the entity in. And actually normally your profits
00:37might decrease for the first year or two until you take all of the cost and get the cost energy.
00:44Using AI tools now, we can probably add 10 points of profit synergy on day one because the amount of
00:51time it used to take to move contracts over, to do all of the sales automation, to do all of
00:56the
00:56revenue forecasting. All of that now using AI can be shrunk down to literally a few weeks. If you can
01:04do that, I can now take that 10 percent. I'm not saying it's 90 percent, but 10 percent and invest
01:10it
01:10instead in marketing and R&D and innovation to drive the revenue growth even higher. That's an example of
01:16what I mean by use the AI to really fundamentally change how you do business. It's got to become
01:21part of your operating model of the company. Are you taking that medicine yourself internally?
01:27We are. In the last acquisition we did, we actually managed to take out about 60 percent of the G
01:33&A
01:33on day one. What's the message, though, that you have not only for your partners, but also
01:38internally for your own workforce with regards to how this actually not only helps, but maybe the idea
01:45that maybe it requires a smaller headcount. It's not necessarily going to be a smaller headcount.
01:50So a lot of people talk about this. So let me give you an example. On early on college hires,
01:56we tripled our hiring in 2026 compared to 2025. Okay. For entry level positions. For entry level
02:02positions. Tripled. Absolute number tripled. So you look at me and say why? Because my belief is if
02:09these tools make people who are coming in out of college more productive, quicker, that means we are
02:15going to be advantaged by having more capacity to build things at a cheaper cost point, which means
02:21we can go get market share. Will the shape of the workforce change? Absolutely. But I think there
02:26will be more people in the value driving functions, be it R&D, be it sales, be it marketing and
02:32the
02:32creative activities. And some of what I would call classic back office will decrease because you don't
02:38need so much there. So the shape of the workforce changes. Total employment is not decreasing.
02:42I want to talk about security. Obviously, we know the potential opportunities when it comes to AI,
02:48quantum and everything in between. You've invested about so far a commitment of about $5 billion
02:53towards something called Project Lightwell. The idea that it gives your partners a little bit more
02:58visibility about flaws in that sort of AI chain, if you will, for my sort of uninformed framing of it.
03:06But talk about why that's necessary. And more importantly, is $5 billion going to be enough?
03:11It's hard to tell whether any amount is enough here. I think, look, this is like asking why are
03:16cyber criminals existing? And the old really sudden joke was, well, I dropped banks because
03:20that's where the money is. Well, if your money is inside the cyber infrastructure, they're going to
03:24come. Our investment in Lightwell, I think a lot of people can point out the problems and point
03:30out vulnerabilities. Our investment in Lightwell is actually about fixing them.
03:34So we are saying that not just open source that we are good at, but if you have open source
03:39and the
03:40source code is known, we can use the same tools that are used to find vulnerabilities to also create
03:45the fix and give it back to the community. That is really what Lightwell is about. Of course,
03:50in order to do that, you need cooperation around where people are finding things, how critical are
03:55they, where are they in the critical infrastructure. So that is the whole project. But it's actually about
04:01us coming up with an antidote, not just the problem. This, I can just tell by looking at your
04:06face, this is probably an exciting time for you. IBM is obviously a storied company when it comes to
04:10computing. And we are clearly at the inflection point of something new, maybe something better.
04:16You've gotten a big bump in your stock price, largely because of at least the government backing or
04:21at least the government support. Is there a sense here, when we talk about the potential for an
04:25acceleration in revenue growth, the widening of profit margins, that that is something that is
04:31imminent or is that something still long term? Well, it depends on what you call long term. I kind of
04:36liken what we're doing on quantum and cyber to where GPUs were in 2015, 2016. And each era of technology
04:45tends to go faster. So if I say QPUs plus cyber is going to go fast, I think in the
04:52next two, three years,
04:53we're going to see incredible returns coming from these technologies.
Comments