IBM's Q4 2024 earnings report is expected to highlight key topics including AI growth, Red Hat's acceleration, and the progress of its $7 billion HashiCorp acquisition.
IBM’s Q4 revenue is projected at $17.5 billion, slightly below Wall Street’s $17.6 billion estimate, mainly due to foreign exchange rates. For Q1 2025, IBM may forecast $14.6 billion in revenue.
Despite this, the company anticipates 7% year-over-year growth for 2025, surpassing expectations, with a free cash flow of $12.6 billion.
Key Takeaways from IBM
IBM's Q4 2024 earnings report is expected to reveal important insights into the company's performance as it navigates key initiatives, including its AI momentum and strategic acquisitions.
These updates will shed light on its growth trajectory and challenges, especially in light of foreign exchange impacts and evolving business segments.
Below are the key points:
AI Momentum
IBM continues to see strong growth in artificial intelligence, with its enterprise AI business hitting $1 billion in Q4 and a generative AI portfolio exceeding $3 billion. Expect updates on AI-driven business processes and partnerships, including the launch of Rise with SAP on IBM Power Virtual Server.
Red Hat Growth
Red Hat, a key subsidiary, is experiencing increased momentum, particularly in AI, and is expected to see mid-teens revenue growth in 2025. New acquisitions and product enhancements, like OpenShift virtualization and AI-powered containers, contribute to this growth.
HashiCorp Acquisition
IBM is close to finalizing its $7 billion acquisition of HashiCorp, a provider of cloud management software. Despite regulatory scrutiny, analysts are optimistic about the deal's completion, which could strengthen IBM's software and cloud offerings.
Mainframe Refresh
IBM’s z17 mainframe refresh, expected in mid-2025, could drive infrastructure growth. However, short-term challenges from the z16 cycle may result in a 9% drop in Q4 infrastructure revenue. Analysts predict stronger growth for the segment in 2025.
Consulting Division
IBM Consulting faced flat growth due to discretionary spending constraints, but acquisitions aimed at expanding its Oracle Cloud services could boost this segment in 2025. AI and backlog conversion are expected to drive a positive outlook for consulting revenue.
These highlights paint a picture of IBM’s strategic focus on AI, cloud expansion, and acquisitions, with mixed results in certain segments, but an optimistic outlook for 2025.
