IBM shares rise after strong Q4 earnings beat expectations
The company reported revenue of $19.69 billion for the quarter, beating analysts’ estimates of $19.23 billion, and adjusted earnings of $4.52 per share, ahead of expectations of $4.32 per share, according to the report.
IBM share price rises today: AI is driving growth in IBM’s software segment
Artificial intelligence continues to be a major growth engine for IBM. Revenue from the software segment came in at $9.03 billion, beating expectations of $8.77 billion, Reuters reported. In software, the Automation unit grew 18% in the quarter, while the Data unit grew 22%.
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Strategic acquisitions Strengthen IBM’s software portfolio
IBM has been actively expanding its software capabilities through acquisitions, including the $6.4 billion purchase of HashiCorp and the ongoing $11 billion acquisition of Confluent. CFO Jim Kavanaugh noted that the Confluent deal is expected to contribute about $600 million in dilution in 2026, mainly from stock-based compensation and interest expense, according to a Reuters report.
IBM Earnings: Hybrid cloud growth slows due to federal shutdown
IBM’s high-margin hybrid cloud business, Red Hat, saw growth slow to 10% in Q4 from 14% in Q3 and 16% in Q2. Kavanaugh attributed the slowdown in part to the longest U.S. government shutdown in history last quarter, noting that federal clients account for about 15% of Red Hat’s bookings, according to a Reuters report.
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Federal funding risks could affect Red Hat’s reservation
He pointed out that while the federal government faces the risk of another partial shutdown this week, the company hopes any disruption will be short-lived. Kavanaugh said: “We’ll have to deal with it as we move forward. Hopefully it’s a short-term disruption,” adding: “If the government passes the budget resolution and gets back to business and there’s no shutdown, we’ll have to wait and see how that plays out,” Reuters quoted him as saying.
IBM AI Book of Business Expands to $12.5 Billion
The company’s AI-powered services continue to expand rapidly. IBM’s AI book of business grew $3 billion from the previous quarter to $12.5 billion. Kavanaugh said the company will stop reporting that metric separately starting in the first quarter of 2026.
Frequently asked questions
Why did IBM stock go up today?
IBM beat revenue and profit estimates on strong demand for artificial intelligence and software.
What revenue did IBM report?
IBM reported revenue of $19.69 billion, beating analysts’ estimates of $19.23 billion
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