IBM Exceeds Q4 Estimates; Projects 5% Revenue Growth for 2026

• Q4 revenue of $19.69 billion beat estimates of $19.23 billion, up 12% year-over-year from $17.6 billion
• IBM's generative AI book of business reached over $12.5 billion, with software revenue up 14% and infrastructure sales up 21%
• 2026 revenue growth forecast of 5%+ exceeds analyst expectations of 4.6%, with free cash flow expected to rise $1 billion from 2025's $14.7 billion

IBM Q4 2025 Results and 2026 Outlook Summary

Fourth Quarter Performance:

IBM exceeded Wall Street expectations for Q4 2025, reporting revenue of $19.69 billion versus the $19.23 billion consensus estimate. This represents 12% year-over-year growth from $17.6 billion in Q4 2024. Net income surged to $5.6 billion, or $5.88 per share, beating earnings estimates.

Segment Performance:

• Software: Revenue climbed 14% to $9 billion, driven by automation, data analytics, and Red Hat products
• Infrastructure: Sales jumped 21% to $5.1 billion, with IBM Z Systems mainframe computers showing exceptional 67% year-over-year growth

2026 Guidance:

IBM projects full-year revenue growth exceeding 5%, slightly above analyst expectations of 4.6% but decelerating from 2025's 8% growth rate. The company anticipates free cash flow will increase by $1 billion after reaching $14.7 billion in 2025.

Key Highlights:

CEO Arvind Krishna reported that IBM's generative AI book of business surpassed $12.5 billion, underscoring the company's positioning in the AI market. The board approved a dividend of $1.68 per share.

Market Implications:

IBM's strong performance demonstrates robust demand across its technology and consulting portfolio, particularly in AI-related services and legacy mainframe systems. The solid guidance suggests confidence in sustained growth despite macroeconomic headwinds. The deceleration in revenue growth from 8% to 5% indicates management is taking a measured approach to 2026 projections, while the increased cash flow generation strengthens IBM's ability to return value to shareholders through dividends and potential buybacks.