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IBM bets on mainframes and hybrid cloud to power enterprise AI

Big companies can now run AI with full control over their data, without depending only on outside cloud services.

AIGenerated · 4 min read · Written by AI from the sources listed below
Contemporary computer with black screen placed on stand near row of server steel racks in data center.
Contemporary computer with black screen placed on stand near row of server steel racks in data center. File picture · Photo: Brett Sayles / Pexels

How it works

IBM's enterprise AI system that lets big companies run AI inside their own controlled infrastructure instead of sending data to outside clouds.

What you could do with it

  • A bank could run AI workloads on IBM Z mainframes to process sensitive financial data while keeping that data under its own control rather than sending it to outside cloud providers 1.
  • An enterprise IT team could build and manage AI agents across both on-premises and cloud systems using watsonx Orchestrate, including with voice input thanks to a partnership with Deepgram 1.
  • A large company could automate security, monitoring, and operations across its hybrid infrastructure through the repositioned Concert platform designed for agentic IT operations 1.

A gap between plan and action

Deloitte research found that 54% of companies say they intend to put at least 40% of their AI initiatives into live operation within six months, but just a quarter have already managed it 1. Companies want AI but struggle to go beyond early experiments.

IBM sees an opening here. Rather than competing to build the biggest or smartest standalone AI model, it is betting that enterprises care more about trust, reliability, and making AI actually work inside their existing systems 1.

Dave Vellante, who covers the industry for theCUBE Research, said IBM has "found a differentiated path in enterprise AI by productizing workflow-level outcomes across a stack that, while sometimes confusing, customers generally trust" 1.

Four pillars of IBM's enterprise AI

IBM is organizing its strategy around four areas: agent orchestration, trusted data, intelligent operations, and governance 1. It has been assembling the pieces through a series of acquisitions and announcements leading up to its IBM Think 2026 conference in May.

In February, IBM partnered with Deepgram to add voice capabilities into watsonx Orchestrate, its platform for building and managing AI agents 1. Two months later, IBM Bob, an AI coding assistant, was made available worldwide .

Perhaps the biggest move came in May when IBM completed its acquisition of Confluent, a data streaming platform, to strengthen watsonx.data — aiming to give AI agents a continuously updated and trusted source of information 1. At Think 2026, IBM also repositioned Concert as an agentic IT operations platform designed to manage observability, security, and automation across hybrid environments .

Governance — IBM's final pillar — is addressed through the IBM Sovereign Core platform, which embeds compliance and operational control directly into the underlying infrastructure 1.

Mainframes are back in business

Over 70% of all enterprise data remains stored in on-premises systems, according to IBM CEO Arvind Krishna, making hybrid cloud approaches essential 1. That legacy hardware is now finding new life.

Revenue from IBM Z mainframes grew 51% year over year 1. Red Hat OpenShift, which supports IBM's hybrid cloud software, saw its revenue rise 13% . IBM is embedding AI technology directly into these mainframes to support demanding AI workloads while keeping data under customer control .

Ric Lewis, senior vice president of IBM's Infrastructure Division, said: "Sovereignty is our home court. We do 70% of the world's financial transactions" 1. The most important global data travels through IBM Z systems, he added, describing them as sovereign systems used by banks and insurance companies .

John Furrier of theCUBE Research summarized IBM's strategy simply: "While others chase frontier models, IBM is betting on something harder: trusted AI in production" 1.

<div style="font-style: italic;">This story reports on a trend for information only. It is not advice or encouragement to do any of it.</div>

Key facts

  • IBM earned $12.5 billion in AI-related software and consulting in Q4 2025, up from $9.5 billion the prior quarter

Only a quarter of organizations have successfully launched AI into production, yet 54% plan to move at least 40% of their AI projects into real-world use within six months, according to Deloitte research.

  • IBM Z mainframe revenue grew 51% year over year; Red Hat revenue grew 13%
  • IBM acquired Confluent for data streaming and partnered with Deepgram for voice capabilities
  • Over 70% of enterprise data remains on-premises, driving demand for hybrid cloud solutions

Sources

  1. IBM's enterprise AI operating model takes shape - SiliconANGLE — siliconangle.com

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