IBM’s $660M Miss Exposes the Software Budget Squeeze Behind 2025’s B2B Sales Quota Collapse

Last Updated: August 11, 2026

IBM stunned investors on July 14, 2026, when it warned that second-quarter revenue would land roughly $660 million below Wall Street’s estimate, and CEO Arvind Krishna told analysts the shortfall was driven by corporate clients diverting capital spending toward AI infrastructure instead of software. U.S. News & World Report and Forbes both covered the fallout the same day: IBM shares fell 22% in a single session, and Microsoft, ServiceNow, Salesforce, and Intuit dropped 3% to 5% as investors reassessed how AI capital expenditure is squeezing the software budgets sales teams depend on. The timing is notable — it lands in the same stretch that B2B sales quota attainment fell to its lowest level in years, even as sales organizations poured record sums into AI sales agents.

What happened to B2B software budgets in July 2026?

Enterprise clients pulled capital spending away from software renewals toward AI servers and storage, forcing IBM to miss revenue targets and dragging down CRM and sales-tech stocks industry-wide, resetting growth expectations for software vendors through year-end.

Krishna told analysts that “in the last few weeks of June, we saw clients shift their quarterly capex spend toward servers, storage, and memory” to secure infrastructure ahead of anticipated price increases, and acknowledged that IBM “did not anticipate the magnitude of the capex reprioritization.” He said “numerous large deals” that were expected to close in the quarter did not, as procurement teams prioritized hardware purchases over software agreements. IBM’s preliminary Q2 revenue came in at $17.2 billion against a roughly $17.86 billion consensus estimate, and the company confirmed full results on July 22, 2026.

The read-through for sales organizations was immediate. The iShares Expanded Tech-Software Sector ETF dropped more than 4% on the news, and analysts flagged that software renewals, consulting engagements, and platform migrations — the exact deal categories that fund enterprise sales teams’ quotas — are the line items most likely to get pushed to a later quarter when a buyer’s capex is reallocated to infrastructure.

How much are B2B sales organizations spending on AI agents in 2026?

Salesforce and Gong both reported record AI agent adoption in the weeks before the IBM warning, with Salesforce’s Agentforce annual recurring revenue reaching $1.2 billion, up 205% year over year, in results announced May 27, 2026.

Salesforce’s fiscal Q1 2027 earnings release showed combined AI and Data ARR — spanning Agentforce and Data Cloud — surpassing $3.4 billion, growing more than 200% year over year, while total quarterly revenue reached $11.13 billion, up 13%. The company said customers generated 3.8 billion “Agentic Work Units” during the quarter alone and had processed 28.6 trillion AI tokens cumulatively. More than half of Agentforce and Data 360 bookings in the quarter came from existing customers expanding their deployments rather than new logos, a signal that current sales-tech buyers are consolidating spend with incumbent vendors rather than testing new ones.

Gong moved in the same direction on June 24, 2026, when it launched what it called Mission Big Dipper, introducing an agentic execution layer and a “Revenue Harness” built on the company’s existing Agent Studio and Model Context Protocol support, according to the company’s press release distributed via PRNewswire. The launch positioned Gong to compete more directly with Salesforce and other revenue-platform vendors on autonomous deal execution rather than call recording and coaching alone, part of the same wave covered in what’s actually working with agentic AI SDRs in B2B sales.

Salesforce’s own State of Sales 2026 report, based on a survey of more than 4,000 sales professionals fielded in August and September 2025, found that 87% of sales organizations now use AI in some form for prospecting, forecasting, lead scoring, or drafting outreach, and 94% of sales leaders whose teams use AI agents called the technology critical to meeting current business demands. Organizations deploying agents broadly reported revenue increases of 3% to 15% and a 10% to 20% improvement in sales ROI.

Why did B2B sales quota attainment fall to a new low in 2025?

Quota attainment kept sliding despite the AI investment: 78% of B2B sellers missed quota in 2025, up from 69% in 2024, according to the Ebsta x Pavilion 2025 GTM Benchmarks Report released in late 2025 and still the most-cited attainment benchmark cited by sales operations teams through mid-2026.

The report, which analyzed $48 billion in pipeline data and surveyed 2,000 chief revenue officers, also found that top-performing reps now close deals 11 times faster than bottom-quartile reps, up from an 8.9x gap in 2024 — evidence that AI tooling and process discipline are widening the gap between elite and average sellers rather than lifting the floor. Separately, CaptivateIQ’s 2026 State of Incentive Compensation Management report found that only 32% of reps say they are immediately aware of changes to their own quota, territory, or capacity, even as 43% of organizations said they are already setting quotas on the assumption that AI tools make reps more productive, with another 41% planning to do the same. That combination — rising AI-adjusted quotas paired with poor communication about how those quotas were set — is emerging as a direct driver of the attainment gap sales operations leaders are now tracking, a dynamic also visible in broader agentic AI enterprise adoption trends and risks for 2026.

The practical effect is that many sales organizations are increasing quota expectations to reflect AI-driven productivity gains before reps have actually adopted the tools or seen the promised time savings materialize in their pipeline.

Do B2B buyers actually trust AI-generated sales insights?

Buyers want AI-assisted research but still rely on human sales reps to validate what that research tells them: 69% of B2B buyers turn to sales reps specifically to validate AI-generated insights before making a purchase decision, according to a Gartner survey released May 20, 2026.

The finding sits alongside a seemingly contradictory data point from an earlier Gartner survey, published March 9, 2026, in which 67% of B2B buyers said they prefer a rep-free purchase experience and 70% said they prefer a purchase process that is entirely digital and self-service. Gartner’s Robert Blaisdell, a VP Analyst covering sales, said the two findings are not in conflict: “Buyers still turn to sales reps to validate AI-generated insights and support decision-making at critical moments,” even when they would rather avoid rep contact for the bulk of the buying journey. Gartner’s underlying data showed reps were 28 percentage points more likely than generative AI tools to help buyers advance to the next purchase stage, 32 points more likely to instill confidence in a decision, and 39 points more likely to demonstrate a genuine understanding of the buyer’s needs. Gartner also reported that organizations using AI-enabled next-best-action recommendations saw 2.6 times higher odds of commercial growth, and that seller AI upskilling programs correlated with 2.4 times stronger revenue growth.

Greg Hessong, a Gartner Senior Director Analyst, said in the same release that “the most effective sales organizations are not simply layering AI onto existing ways of working” — the data suggests reps still need to be positioned as the validation layer for AI output, not replaced by it, if organizations want to capture the growth Gartner’s data associates with AI adoption.

What does the budget squeeze mean for sales teams closing deals in Q3 2026?

Sales cycles tied to software renewals and platform migrations are the deals most exposed to the capex shift IBM described, meaning reps carrying quota against those categories should expect longer cycles and harder ROI scrutiny through the rest of 2026.

Because procurement teams are prioritizing infrastructure purchases that are perceived as more urgent or supply-constrained, software deals — including sales technology renewals — are more likely to get re-scoped, delayed a quarter, or renegotiated down to a smaller initial commitment with expansion built in later. That pattern matches what Salesforce itself reported: more than half of its Agentforce and Data 360 bookings in the most recent quarter came from expansion of existing accounts rather than new business, suggesting incumbent vendors are winning by protecting installed base rather than opening net-new budget. Sales leaders selling into IT and procurement functions specifically should expect buying committees to ask harder questions about total cost of ownership and consumption-based pricing, since those are the terms IBM’s own commentary suggested are driving reallocation decisions.

What should B2B sales leaders change right now?

Sales leaders should treat this stretch of mixed signals — rising AI investment, falling quota attainment, tightening software budgets, and a persistent buyer trust gap — as a mandate to change how deals are resourced and how reps are measured, not simply to buy more AI tooling.

• Re-audit Q3 and Q4 pipeline for capex-displacement risk. Flag any deal categorized as a software renewal, platform migration, or consulting engagement and confirm the buyer’s infrastructure budget cycle before forecasting it as committed.
• Communicate quota changes explicitly and early. CaptivateIQ’s data shows only 32% of reps are immediately told about quota, territory, or capacity changes — closing that gap is a low-cost way to protect attainment and retention before AI-adjusted quotas take effect.
• Position reps as validators, not narrators, of AI output. Gartner’s data shows buyers already trust AI for research; the differentiated role for reps is confirming accuracy and building confidence at the decision moment, so train sellers accordingly rather than having them simply repeat AI-generated talking points.
• Benchmark attainment against the Ebsta/Pavilion 11x gap, not last year’s internal numbers, and invest coaching budget in closing the gap between top and average reps rather than spreading AI tool access evenly across the team.
• Shift renewal conversations toward consumption-based and outcome-based pricing ahead of Q3 and Q4 renewals, since IBM’s own commentary suggests buyers are reallocating budget toward spend they can flex, not fixed software contracts.
• Track AI agent ROI in the same terms Salesforce and Gong report it — bookings from expansion versus new logos, and time saved per rep — so sales leadership can defend AI tooling spend with the same rigor finance is now applying to software renewals.

None of the individual data points released this summer is, on its own, a reason to panic. Taken together, though, they describe a market where AI agent capability is scaling faster than either quota-setting practices or buyer trust have caught up, and where the software budgets sales teams rely on to hit quota are under new competitive pressure from AI infrastructure spend. Sales leaders who treat July and August 2026 as a planning checkpoint — rather than waiting for Q3 close to reveal the damage — will be better positioned heading into fall renewal season. For more on building resilient go-to-market operations, see the Sales department hub.