TLDR
- IBM posted Q4 earnings of $4.52 per share, crushing the $4.32 consensus estimate by 20 cents
- Revenue hit $19.69 billion for the quarter, exceeding Wall Street’s $19.23 billion projection
- GenAI business totaled $12.5 billion with software and consulting segments driving adoption
- Annual free cash flow reached $14.7 billion in 2025, marking 16% growth and a ten-year high
- Company projects 2026 revenue growth above 5% with software acceleration to 10%
IBM delivered a knockout punch on earnings day. The tech company reported fourth-quarter results on January 28, 2026, that blew past every major metric Wall Street was watching.
Earnings per share landed at $4.52 adjusted. The Street had penciled in $4.32. Revenue totaled $19.69 billion against expectations of $19.23 billion.
International Business Machines Corporation, IBM
Net income for the quarter reached $5.6 billion, or $5.88 per share. That’s nearly double the $2.92 billion, or $3.09 per share, from the same quarter in 2024.
Shares jumped 8% as investors digested the report. The rally reflected confidence in IBM’s transformation into an AI and hybrid cloud powerhouse.
For the full year, IBM brought in $67.5 billion in revenue, up 6% from 2024. But the cash flow story stole the show.
Free cash flow generation hit $14.7 billion for 2025. That represents a 16% increase and the strongest annual performance in more than ten years. This kind of cash gives IBM room to invest in growth while rewarding shareholders.
AI Business Crosses Major Milestone
CEO Arvind Krishna highlighted the company’s artificial intelligence momentum throughout the earnings call. The generative AI book of business now exceeds $12.5 billion across all segments.
Software led the way with 14% revenue growth to $9 billion in Q4. The segment accelerated to 11% growth for the quarter, with over 7 percentage points coming from organic expansion.
Annual recurring revenue in software climbed to $23.6 billion. That’s more than $2 billion above where it stood at the end of 2024. Data offerings grew 19% year-over-year while automation solutions jumped 14%.
Infrastructure posted a surprising 21% revenue increase to $5.1 billion. IBM Z mainframe systems exploded with 67% growth as customers adopted new z17 systems featuring integrated AI capabilities.
Consulting rebounded after a slow first half. Q4 revenue reached $5.3 billion, up 1% from last year. The segment delivered its largest GenAI bookings quarter ever, exceeding $2 billion. Total GenAI bookings in consulting now top $10.5 billion since inception.
Guidance Points to Sustained Momentum
IBM laid out an optimistic roadmap for 2026. The company expects revenue growth to exceed 5% at constant currency, topping the 4.6% analyst consensus.
Software is projected to accelerate to 10% growth in 2026. This expansion will come primarily from organic initiatives rather than acquisitions.
Operating pre-tax income margin should expand by about a point. Free cash flow is expected to increase by approximately $1 billion year-over-year, representing high single-digit growth.
Krishna also revealed IBM is on pace to deliver its first large-scale quantum computer by 2029. This positions the company at the cutting edge of quantum technology alongside its AI investments.
The board declared a $1.68 per share dividend, payable March 10. When paid, this marks 110 consecutive years of quarterly dividends.
Adjusted EBITDA margin expanded by roughly 230 basis points for the year, representing 17% growth. IBM achieved $4.5 billion in productivity savings at the 2025 exit run rate while simultaneously investing in growth areas.
The consulting backlog stands at $32 billion, up 2% at actual rates, providing clear visibility into future revenue.
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