IBM Q4 revenue beats expectations, driven by strong performance in Hybrid Cloud and Automation segments

Overview

• Tech giant's Q4 revenue grew 12%, beating analyst expectations

• Software revenue up 14%, Infrastructure revenue up 21% in Q4

• Generative AI business now exceeds $12.5 bln

Outlook

• IBM expects full-year constant currency revenue growth of more than 5%

• Company anticipates a $1 bln increase in full-year free cash flow

• IBM sees currency as a half-point tailwind to growth for 2026

Result Drivers

• SOFTWARE GROWTH - IBM reported a 14% increase in Software revenue, driven by strong performance in Hybrid Cloud and Automation segments

• INFRASTRUCTURE ADOPTION - Infrastructure revenue grew 21%, supported by robust adoption of IBM's next-generation mainframe platform

• AI BUSINESS EXPANSION - IBM's generative AI book of business now exceeds $12.5 bln, indicating significant growth in this area

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 11 "strong buy" or "buy", 9 "hold" and 3 "sell" or "strong sell"

• The average consensus recommendation for the it services & consulting peer group is "buy"

• Wall Street's median 12-month price target for International Business Machines Corp is $302.50, about 2.9% above its January 27 closing price of $293.86

• The stock recently traded at 24 times the next 12-month earnings vs. a P/E of 24 three months ago

Press Release: ID:nPn5HBCL1a

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