IBM Forecasts Strong Revenue Growth Amid Focus on AI

IBM, the technology giant, has forecasted full-year revenue growth above market estimates for the upcoming year. The forecast is the result of the constant stability of the market in terms of demands for its IT software and consultancy services. The business is expected to have good revenue, considering the demand for the integration of artificial intelligence (AI) into several business operations.

Moreover, in recently, IBM surges witnessed a surge of 8% and is still growing, amid the AI announcement. This rise in revenue is not only the strength of the company but also how companies and investors are confident about IBM in the revolutionized AI industry.

Despite plans for some layoffs in 2024, IBM remains committed to hiring for AI-centered roles, signaling its continued investment in emerging technologies. The company anticipates ending the year with a largely unchanged headcount and may incur a rebalancing charge similar to the one recorded in 2023.

Under the leadership of CEO Arvind Krishna, IBM has undergone a significant transformation, refocusing its efforts on software and consulting services, with a renewed emphasis on AI. This strategic shift aligns with a broader industry trend towards AI integration across various sectors.

CEO Arvind Krishna highlighted the substantial growth in IBM’s generative AI business, which saw a doubling in sales and bookings in the fourth quarter. The company’s consulting arm played a pivotal role in this success, driving AI-related deals with new customers, including prominent names like Germany’s SAP SE.

Analysts view IBM’s consulting expertise in AI as a significant advantage, particularly when combined with its expanding portfolio of AI software solutions. May De, an analyst at Global X ETFs, noted that IBM’s positioning in the AI market positions it favorably against competitors.

IBM’s outlook for 2024 includes mid-single-digit revenue growth, ranging from 4% to 6%, surpassing Wall Street expectations. CEO Krishna expressed confidence in technology budgets remaining stable, indicating continued demand for IBM’s offerings.

Despite the positive outlook, IBM remains cautious about the economic environment, characterized by volatility and uncertainty. However, the company reported fourth-quarter revenue and adjusted profit above estimates, driven by growth in its software segment.

The infrastructure segment, which includes IBM’s mainframe business, also performed well, fueled by enhancements such as embedded AI on chips. Exchange rates are expected to pose a challenge, potentially impacting 2024 revenue by 100 basis points.

Overall, IBM’s strong performance and optimistic outlook underscore its commitment to innovation and growth in the evolving landscape of technology and AI integration