IBM In a forecast released Wednesday, full-year revenue growth is expected to exceed market expectations as companies seek to adoptAIThe company's shares rose more than 8% in after-hours trading. The company's shares rose more than 8% in after-hours trading.
An IBM spokesperson said the company will make some employee reductions in 2024, but will hire for more AI-centric roles, and does not expect the total number of employees to change much throughout the year.IBM expects there could be rebalancing charges similar to those in 2023, amounting to about $400 million.
Under CEO Arvind Krishna, the 111-plus-year-old company has repositioned itself to focus on software and consulting services and to increase its investment in AI in response to the need for AI integration across different industries. IBM's generative AI business, which includes actual sales and various services, roughly doubled in the fourth quarter compared to the previous quarter, CEO Krishna said.
IBM CFO James Kavanagh says about a third of that business comes from software and the rest from consulting services. He also said the company signed contracts with new clients such as SAP in Germany related to artificial intelligence.
May De, an analyst at Global X ETFs, said, "IBM has a clear advantage in AI consulting, which, combined with its increasingly important AI software solutions, puts it in a good position among its competitors."
IBM expects revenue to grow in the mid-single digits in 2024, around 41 TP3T to 61 TP3T, beating Wall Street's expectation of 31 TP3T.
CEO Krishna said on the earnings call, "The technology budget will be essentially flat in 2024 versus 2023." Kavanagh added that IBM continues to operate in a "very volatile and uncertain" economic environment. Nonetheless, IBM reported fourth-quarter revenue and adjusted profit that exceeded expectations for itsmaximum's business segment, the software business, grew by approximately 31 TP3T.
The Infrastructure segment, which primarily consists of the mainframe business, reported fourth-quarter revenue of $4.6 billion, up from Visible Alpha's estimate of $4.29 billion, thanks to improvements such as embedded artificial intelligence chips.
Kavanagh added that the exchange rate is expected to reduce revenue by 100 basis points in 2024.