Under CEO Arvind Krishna, IBM has shifted from cost‐cutting to growth, posting compound annual revenue and EPS growth of 3% and 1%, respectively, from 2020 to 2024. Key to this turnaround was the $34 billion Red Hat acquisition in 2019 and last December’s agreement to buy Confluent for $11 billion, bolstering IBM’s real‐time data streaming and hybrid cloud capabilities. Rather than compete head-to-head with hyperscale public cloud providers, IBM now offers AI services that analyze data across on-premises and public clouds, appealing to large enterprises wary of full cloud migration. Analysts forecast IBM’s revenue and EPS to grow at CAGRs of 5% and 19% from 2024 to 2027, driven by hybrid cloud integration and expanded AI offerings.

Jefferies analysts have reiterated a Buy rating on IBM, citing signs of accelerating software revenue growth and upward estimate revisions for 2026. The firm highlights momentum in IBM’s software segments, notably in AI-infused middleware and automation tools. Jefferies expects analyst consensus revenue estimates to be raised by 2–3% following IBM’s January 28 earnings report, as robust sales of watsonx.ai and core software maintenance contracts outpace macro headwinds.

IBM’s Q4 software revenue is projected to rise, driven by traction in watsonx.ai deployments and deepening partnerships with major cloud platforms. The Confluent acquisition, pending regulatory approval, is expected to contribute to streaming data revenues in late 2026. Management has guided for mid‐single-digit software top-line growth in the quarter, supported by double-digit increases in AI services usage and renewal rates in core software maintenance.

IBM’s Global Business Services unit is experiencing healthy consulting revenue growth, with management reporting a high-single-digit increase in Q4 driven by AI-driven process automation tools and a strategic alliance with Microsoft. The partnership enables joint go-to-market offerings that integrate Microsoft’s productivity suite with IBM’s AI and hybrid cloud platforms. Consulting bookings for digital transformation engagements rose by 12% in the fiscal fourth quarter, underscoring enterprise demand for AI-enabled advisory services.