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IBM (IBM +5%) is sharply higher following a Q4 earnings beat. Revenue increased 12.2% yr/yr (+9% CC) to $19.69 bln, exceeding expectations and marking IBM's strongest constant-currency growth in more than three years. FY26 guidance was notably bullish, with management expecting 5%+ CC revenue growth and free cash flow up about $1 bln yr/yr, implying high-single-digit growth off its $14.7 bln FY25 base. IBM also guided Q1 CC revenue growth to be in line with the full-year 5%+ outlook. The pending Confluent (CFLT) acquisition is expected to close by mid-2026.

• FY26 revenue growth expectations are driven by IBM's durable and accelerating Software segment, which is expected to grow ~10% this year, led by organic growth, a large recurring revenue base, GenAI traction, M&A synergies, and monetization of its record IBM Z placement, including an inflection in Transaction Processing.
• In Q4, Software revenue accelerated to +11% CC, with Data and Automation gaining strong momentum, growing +19% CC and +14% CC, respectively, as enterprises focus on operating stability in increasingly complex hybrid environments.
• Consulting revenue increased 1% CC in Q4, supported by steady demand as clients move beyond experimentation toward designing, deploying, and governing AI at scale. IBM's generative AI book of business surpassed $2 bln in the quarter, its largest GenAI quarter to date.
• Infrastructure revenue rose 17% CC, with Hybrid Infrastructure up 24%, offset by Infrastructure Support down 2%. Within Hybrid Infrastructure, IBM Z revenue surged 61% yr/yr, delivering the highest Q4 revenue in more than 20 years and reinforcing its role as the backbone of enterprise IT.

Briefing.com Analyst Insight:

IBM's Q4 results and FY26 outlook highlight a company benefiting from a multi-year strategic repositioning toward software, hybrid cloud, and AI-led workloads. Software acceleration, improving GenAI monetization, and a powerful IBM Z cycle provide confidence in management's ability to sustain 5%+ CC growth, a notable achievement for a company of IBM's scale. While Consulting growth remains modest, its role as an AI enabler appears increasingly strategic rather than volume-driven. In a still-dynamic macro environment, IBM is seeing resilient enterprise demand for mission-critical, productivity-enhancing technologies, supporting both revenue durability and expanding free cash flow—key factors underpinning the stock's strong reaction.