Guidance
← Earnings Calls
01
02
03
04 05 06
Tone
AI
A1 A2 A3
IBM
FY2025 Q4
Improving
International Business Machines Corporation earnings call
Buzzberg read
Software growth expected to accelerate to double digits in 2026
IBM reported a strong FY2025 beat on all targets (6% revenue growth, $14.7B FCF) and guided for 5%+ revenue growth and ~$1B FCF increase in 2026, led by software accelerating to 10%. Management highlighted partnerships with NVIDIA, Anthropic, and Mistral, and announced the Confluent acquisition with expected dilution but strong synergy runway. Key supply-chain insight included a sixfold spike in DRAM prices due to HBM demand and a federal shutdown that hit Red Hat bookings. IBM beat 2025 investor day targets: 6% revenue growth, 100bps margin expansion, $14.7B FCF (16% YoY).
Buzzberg read Software growth expected to accelerate to double digits in 2026 IBM reported a strong FY2025 beat on all targets (6% revenue growth, $14.7B FCF) and guided for 5%+ revenue growth and ~$1B FCF increase in 2026, led by software accelerating to 10%. Management highlighted partnerships with NVIDIA, Anthropic, and Mistral, and announced the Confluent acquisition with expected dilution but strong synergy runway. Key supply-chain insight included a sixfold spike in DRAM prices due to HBM demand and a federal shutdown that hit Red Hat bookings. IBM beat 2025 investor day targets: 6% revenue growth, 100bps margin expansion, $14.7B FCF (16% YoY). Read full analysisCollapse analysis
IBM reported a strong FY2025 beat on all targets (6% revenue growth, $14.7B FCF) and guided for 5%+ revenue growth and ~$1B FCF increase in 2026, led by software accelerating to 10%. Management highlighted partnerships with NVIDIA, Anthropic, and Mistral, and announced the Confluent acquisition with expected dilution but strong synergy runway. Key supply-chain insight included a sixfold spike in DRAM prices due to HBM demand and a federal shutdown that hit Red Hat bookings. IBM beat 2025 investor day targets: 6% revenue growth, 100bps margin expansion, $14.7B FCF (16% YoY).
- 2026 guidance: 5%+ revenue growth (constant currency), software growth 10%, FCF ~$15.7B (up $1B).
- Confluent acquisition expected to close mid-2026; ~$600M dilution in 2026, EBITDA accretive first full year, FCF accretive year two.
- Partnerships expanded: Red Hat + NVIDIA for hybrid AI, Project Bob using Anthropic and Mistral models, and quantum collaborations with Cisco/DARPA.
Revenue$19.687B+21% QoQ
EPS$4.52Reported
Gross margin60.59%Reported
Operating margin24.63%Reported
6 grounded callouts
What matters now
The highest-signal changes from the call.
AI
GenAI book of business surpasses $12.5 billion
Productivity
AI productivity savings exceed $4.5 billion annual run rate
Show 3 more callouts
M&A
Confluent expected to close by mid-2026, with ~$600M dilution
Software
Red Hat growth decelerates to 8%, but OpenShift grows 30%
Infrastructure
Z17 launch drives record mainframe revenue, up 48% annually
Reported period
Actuals
| Metric | Reported | Change |
|---|---|---|
| Revenue | $19.687B | +21% QoQ |
| EPS | $4.52 | Reported |
| Gross margin | 60.59% | Reported |
| Operating margin | 24.63% | Reported |
| Free cash flow | $3.131B | -15% QoQ |
| Capex | $0.908B | Reported |
Forward-looking
Forward guidance
| Metric | Period | Range | Midpoint | Status |
|---|---|---|---|---|
| Revenue | FY2026 | 5% | 5% | Maintained |
| RevenueSOFTWARE | FY2026 | 10% | 10% | Maintained |
AI, capex & demand read
Management read
Confident
Management expressed strong confidence in their strategic execution, citing record revenue growth and free cash flow, and provided upbeat guidance for continued 5%+ growth and double-digit software growth in 2026.
Management AI read
Management emphasized that enterprise clients are moving beyond experimentation with GenAI, driving a $12.5 billion cumulative book of business, with software and consulting both seeing record quarterly increases. They also highlighted a hybrid approach to AI models, positioning IBM to capture both on-premise and public cloud AI workload growth, with an expectation that 50% of enterprise AI usage
all 11 named companies below
Companiesreturns since call
Customers
Customers
Arvind Krishna
Morgan Stanley is a named customer deploying IBM GenAI in production workflows, indicating real enterprise adoption.
Evidence
“Companies like Morgan Stanley and FedEx are leveraging our technology solutions and infusing our GenAI products into core workflows.”
Customers
Arvind Krishna
MasterCard is a customer using IBM's data and AI portfolio, highlighting cross-sell across software segments.
Evidence
“And MasterCard is leveraging our technology solutions, including data management platforms, software platforms, and Gen AI products and solutions.”
Partners
Partners
Arvind Krishna
IBM includes Meta's open models as part of its multi-model strategy for enterprise AI deployment.
Evidence
“Open models from Hugging Face, Meta, and Mistral.”
Partners
Arvind Krishna
Red Hat partnership enables AI-accelerated workloads across hybrid environments, expanding accessible AI infrastructure.
Evidence
“Recently, we announced a partnership between Red Hat and NVIDIA that aligns our hybrid AI solutions and NVIDIA's AI stack.”
ANTHROPIC
MISTRAL
Partners
Arvind Krishna
IBM uses Anthropic models in internal AI development system, boosting developer productivity by 45%.
Evidence
“Project Bob introduces intelligent orchestration between industry-leading frontier models such as Anthropic, Claude, and Mistral.”
Partners
Arvind Krishna
IBM is working with Cisco on quantum computing, indicating ecosystem expansion in nascent quantum market.
Evidence
“Our collaboration with organizations such as Cisco and participation in government initiatives like the U.S. Department of Energy's Genesis mission and DARPA's quantum benchmarking initiative reflect growing confidence in IBM's approach.”
Supply chain
Supply chain
Arvind Krishna
IBM is acquiring Confluent; expects $600M dilution in 2026 but accretive to EBITDA within first full year and FCF in year two.
Evidence
“Our announced acquisition of Confluent is another pillar in this strategy, helping unify our hybrid cloud and automation solutions through a smart data platform.”
Supply chain
Spot DRAM prices are six times higher than last year due to capacity shifting to HBM for AI servers, creating potential cost pressure for server hardware but also driving demand for CPU servers alongside AI GPUs. — Higher DRAM costs may squeeze margins for server OEMs and memory makers, but also reflect sustained AI infrastructure buildout that benefits CPU/GPU demand.
Arvind Krishna
Supply chain
Red Hat's Q4 bookings were impacted by U.S. federal government shutdown delays, causing a single-digit bookings growth that decelerated revenue growth to 8%. — Federal buying pauses reveal a temporary headwind for Red Hat that could reverse once shutdown ends, but also indicates dependency on government contracts for the open-source leader.
Jim CavanaughExternal signals
Supply-chain alpha · 3returns since call
Spot DRAM prices are six times higher than last year due to capacity shifting to HBM for AI servers, creating potential cost pressure for server hardware but also driving demand for CPU servers alongside AI GPUs.
Red Hat's Q4 bookings were impacted by U.S. federal government shutdown delays, causing a single-digit bookings growth that decelerated revenue growth to 8%.
IBM expects $600 million dilution from Confluent in 2026, driven by stock-based compensation and interest, but aims for EBITDA accretion in first full year and FCF accretion in year two via $500M run-rate synergies.
Methodology & coverage
Management-only analysis. All 11 validated company mentions are shown. Reported actuals and forward guidance are kept separate. Public evidence is limited to eight short attributed quotes. AI-generated analysis can be incomplete or wrong; verify important claims against the original source.