Investors have been enthusiastic about the strategy as software has provided an increasingly share of the company’s sales
Published Thu, Jan 29, 2026 · 06:01 AM
[SAN FRANCISCO] International Business Machines (IBM) reported quarterly sales that topped analysts’ estimates on strong growth for its closely watched software unit.
Revenue increased 12 per cent to US$19.7 billion in the fourth quarter, the company said on Wednesday (Jan 28). Analysts, on average, projected US$19.2 billion. The largest chunk of revenue came from IBM’s software business, which jumped 14 per cent to US$9.03 billion, also above estimates.
Big Blue has worked to orient itself around high-growth software through major acquisitions of Red Hat, HashiCorp and Confluent. Investors have been enthusiastic about the strategy as software has provided an increasingly share of IBM’s sales.
The shares gained about 3 per cent in extended trading after closing at US$294.16. The stock has gained 30 per cent over the past twelve months, outpacing many technology industry peers.
The company projected that revenue will grow more than 5 per cent in 2026, adjusting for currency fluctuations. That exceeds the 4.1 per cent anticipated by Wall Street. Free cash flow will be about US$15.7 billion, which also beat analysts’ average estimate. “We enter 2026 with momentum and in a position of strength,” chief executive officer Arvind Krishna said.
Bookings for IBM’s AI business have exceeded US$12.5 billion since mid-2023, the Armonk, New York-based company said. That’s an increase from the US$9.5 billion disclosed during its prior earnings report. A bit more than 80 per cent of the bookings come from the consulting unit, with the rest in software, said chief financial officer Jim Kavanaugh.
While IBM’s software unit has thrived, its consulting business has seen multiple quarters of strain. In the fourth quarter, sales rose 3 per cent to US$5.35 billion, just shy of the US$5.38 billion anticipated by Wall Street.
The infrastructure unit generated US$5.13 billion in revenue, topping the average estimate, on continued strong sales for the company’s latest mainframe computers released last year.
In November, IBM announced it would cut thousands of workers. Kavanaugh said the reductions were about investing in focus areas and driving productivity, and not because of AI implementation. BLOOMBERG
Decoding Asia newsletter: your guide to navigating Asia in a new global order. Sign up here to get Decoding Asia newsletter. Delivered to your inbox. Free.
