IBM clocked strong growth in its generative AI book during 2024, which now stands at $5 billion, and has projected a strong revenue growth of at least 5 percent for fiscal 2025, sending the shares higher by 10% on Wall Street during extended trading hours on January 29.
"...we're well-positioned for 2025 and beyond and expect revenue growth of at least five percent and free cash flow of about $13.5 billion this year," Arvind Krishna, IBM chairman, president and CEO said.
"Clients globally continue to turn to IBM to transform with AI. Our generative AI book of business now stands at more than $5 billion inception-to-date, up nearly $2 billion quarter over quarter," Krishna said.
IBM added that the company continues to 'gain momentum' in the generative AI business, with one-fifth of the AI business coming from Software, and the remaining from Consulting.
The results highlight IBM's effort to transform from a computer company into a software and services business. Software is now about 45% of IBM's business, with more than $15 billion of ARR, growing at double digit. This business grew, supported by 16% growth in Red Hat, an open-source software company that IBM had acquired in 2019.
CFO Jim Kavanaugh said the Trump's administration's plans to cut down on Federal spending are a 'significant opportunity', as more tech-related initiatives may be brought into the governance.
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