IBM Corporation (NYSE:IBM) IBM (NYSE: IBM) reported standout results for the final quarter of 2025, beating analyst expectations on both the top and bottom lines. The software segment remains the company’s primary growth engine and now accounts for 45% of total revenue. This division grew 14% during the quarter, fueled by robust demand in automation and data as clients look to streamline their operations. The consulting arm also successfully returned to growth, as enterprises increasingly move from AI experimentation to full scale deployment. This shift helped propel IBM’s cumulative generative AI book of business to $12.5 billion, representing a significant acceleration in market adoption.
Management’s guidance for 2026 provided a bullish surprise, with a 10% growth target for software that leadership described as conservative. This outlook is underpinned by the strategic integration of HashiCorp and the anticipated mid-year close of the Confluent acquisition, both of which expand IBM’s footprint in hybrid cloud and data streaming. Furthermore, the continued momentum of Red Hat and the rapid scaling of OpenShift provide a stable foundation for high-value recurring revenue.
The company also expects to benefit from a unique hardware to software flywheel effect following the successful launch of the z17 mainframe. While the initial hardware surge was significant, management emphasized that the massive install base will act as a pull-through mechanism for software throughout 2026. As clients add more workloads to these new systems, they naturally increase their consumption of IBM software offerings. This ecosystem strategy allows IBM to maintain growth even as hardware cycles normalize.
For more details, key highlights, and commentary, check out the high-level earnings summary.
