Big Blue bounces back - TechCentral

Image: Mark Ahsmann

IBM gave a stronger-than-expected revenue growth outlook for the coming years led by the expansion in its software business.

Long-term sales will increase more than 5% annually, IBM chief financial officer Jim Kavanaugh said on Tuesday during a presentation. Kavanaugh didn’t define the number of years included in the forecast, though analysts has on average projected growth of about 4% in constant currency for financial years 2026 and 2027.

IBM has been transforming itself from a conventional computer company into one focused on software and services. It has used acquisitions to expand products, including a proposed takeover of Hashicorp announced in April and the purchase of Apptio for US$4.6-billion in 2023.

The consulting market is going through a transition with the technological shift of generative AI

The shares rose 1.4% to $264.46 at the close in New York. The stock was at a record high leading into the event, including a 13% jump on 30 January owing largely to enthusiasm over Big Blue’s strong fourth-quarter results, led by the software business, and a forecast for 2025 revenue to increase “at least 5%” in constant currency.

Long-term revenue from the software business will gain about 10% annually, Kavanaugh said. Analysts had expected growth of 7-9% through to 2027. The infrastructure unit will increase 1-3%, Kavanaugh said. Later in the decade, this unit will see revenue from quantum computing, he added.

Read: Naspers CEO is on the hunt for deals – with $20-billion to spend

Consulting, a division that has struggled in recent quarters, will grow ahead of the market, Kavanaugh said. “The consulting market is going through a transition with the technological shift of generative AI.” — Brody Ford, (c) 2025 Bloomberg LP

Get breaking news from TechCentral on WhatsApp. Sign up here.