Barclays: IBM capex pivot boosts firewalls as Mythos threat eats IT budgets
Investing.com -- While IBM’s negative second-quarter preannouncement sent shockwaves through the broader enterprise software sector, Wall Street is identifying a clear silver lining for cybersecurity stocks.
According to a new research note from Barclays analyst Saket Kalia, the massive shift in enterprise capital expenditure (capex) that derailed IBM’s software sales is actually acting as a short-term catalyst for firewall vendors, compounded by an increasingly hostile global threat environment.
In his letter to shareholders, IBM CEO Arvind Krishna noted that in the final weeks of June, clients abruptly shifted their quarterly capex toward servers, storage, and memory to secure supply-constrained infrastructure ahead of expected price increases. According to Kalia—whose colleague Raimo Lenschow covers IBM for Barclays—this frantic procurement pivot extends directly into hardware-based cybersecurity.
Kalia noted that based on Barclays’ channel checks, enterprise buyers are aggressively purchasing firewalls to get ahead of impending price hikes driven by rising input costs.
"While IBM is calling this out as a negative for their business, we believe this reads as a short-term positive for the firewall space," Kalia wrote. He pointed out that changing customer behavior observed in the first quarter continued into Q2, which bodes well for major network security vendors, including:
However, Kalia cautioned that this surge is a double-edged sword. Because customers are altering their buying patterns specifically to beat price increases, it serves as another data point indicating that some of the current strength in firewalls is pulled-forward demand rather than purely organic growth, which could create a difficult comparison in future quarters.
Beyond supply chain panic, the broader enterprise IT budget is being actively cannibalized by urgent, defensive security needs.
In its preannouncement, IBM cited that clients were "distracted with rapidly-evolving, industry-wide cybersecurity concerns" during the quarter. Kalia directly attributed this massive enterprise distraction to Mythos, which he noted has significantly "elevated the threat environment."
As IT departments scramble to fortify their networks against this rising threat, cybersecurity has become an absolute mandate. Kalia observed that this urgent environment is "potentially supporting security spending at the expense of other areas of spending." Consequently, this defensive posture is actively crowding out investments in other areas of enterprise technology, leaving traditional software, consulting, and legacy infrastructure projects effectively starved for capital.