IBM beat Wall Street estimates for second-quarter revenue and profit on Wednesday, but lower-than-expected sales in its mainstay software segment overshadowed a renewal in demand for the mainframe business spurred by AI upgrades.

One blip on IBM’s results sheet was software revenue, which increased 10%, to $7.39 billion, in the quarter, but fell short of the Street’s $7.43 billion target. On the other hand, IBM’s hybrid cloud revenue, which includes sales from Red Hat, grew by 16%, just ahead of estimates.

Shares of IBM (NYSE:IBM) dropped more than 5% in premarket trading on Thursday after weaker software sales overshadowed the company’s stronger-than-expected earnings and revenue fueled by ongoing demand for AI technologies.