International Business Machines Corporation stock (US4592001014): AI bets and Red Hat growth in focus after latest IBM update

International Business Machines Corporation has updated investors with fresh figures on its software and consulting momentum, while its AI and hybrid cloud strategy remains in the spotlight. What the latest numbers and developments could mean for IBM’s stock story.

International Business Machines Corporation has recently reported new quarterly figures and updated investors on the progress of its hybrid cloud and artificial intelligence strategy, including contributions from Red Hat and growing software demand, according to the company’s earnings materials and conference call published on 04/30/2024 and on 01/24/2024 on its investor relations site and via major financial media such as Reuters on 04/30/2024, as summarized by IBM investor relations as of 04/30/2024 and Reuters as of 04/30/2024.

As of: 24.05.2026

By the editorial team – specialized in equity coverage.

At a glance

• Name: IBM
• Sector/industry: Information technology, enterprise software and IT services
• Headquarters/country: Armonk, United States
• Core markets: Global large enterprises, government and regulated industries
• Key revenue drivers: Hybrid cloud services, Red Hat, software subscriptions, consulting
• Home exchange/listing venue: New York Stock Exchange (ticker: IBM)
• Trading currency: US dollar (USD)

International Business Machines Corporation: core business model

International Business Machines Corporation, better known as IBM, is a US-based technology group focused on enterprise customers that has shifted from legacy hardware toward software, consulting and cloud services over the last decade. The company still offers mainframe systems and infrastructure, but management now emphasizes recurring software revenue and higher-margin services anchored around data and artificial intelligence. This pivot has been reinforced by recent earnings disclosures in 2024, where software and consulting segments accounted for the majority of group revenue and profit, according to IBM investor materials as of 04/30/2024.

The strategic centerpiece of IBM’s transformation is its hybrid cloud architecture, which allows corporate customers to run workloads across on-premises data centers and multiple public clouds. Red Hat, acquired in 2019, is a central technology foundation for this approach through its OpenShift and Linux platforms. In the latest reported quarter, IBM highlighted that Red Hat continued to grow at a double-digit rate year-on-year and remained a key engine for software expansion, according to IBM quarterly earnings as of 04/30/2024.

Another pillar of the business model is consulting, which supports clients in designing, building and managing complex IT landscapes. IBM’s consulting arm works closely with hyperscalers, software vendors and industry partners to implement hybrid cloud and AI solutions. The company has pointed out in recent updates that consulting orders are increasingly tied to multi-year transformation projects, adding visibility to future revenue streams. This service-led approach complements IBM’s software stack and is designed to lock in customers over longer periods, as discussed in the earnings call summarized by Reuters as of 04/30/2024.

Main revenue and product drivers for International Business Machines Corporation

In the most recently reported quarter for the period ending 03/31/2024, IBM stated that total revenue grew modestly year-on-year, with software and consulting leading the expansion, while infrastructure revenue was relatively stable, according to figures disclosed in its earnings release on 04/30/2024 on the investor relations website. Software revenue benefited from strength in Red Hat, automation and data and AI offerings, while transaction processing software delivered resilient cash generation, according to IBM quarterly earnings as of 04/30/2024.

Consulting revenue is driven by business transformation, technology consulting and application operations, with demand underpinned by projects in cloud migration, analytics and industry-specific solutions. During 2024 updates, IBM emphasized that signings and backlog in consulting remained healthy and that its focus areas include financial services, public sector and industrial clients. This mix reflects IBM’s positioning in mission-critical workloads where reliability, security and compliance rank as high priorities for customers, a theme highlighted in materials published alongside the company’s 2023 annual report on 02/01/2024, according to IBM annual report as of 02/01/2024.

The infrastructure segment remains strategically important despite slower growth, as it includes IBM’s zSystems mainframe platforms and storage solutions, which support large transaction volumes in banking, insurance and other regulated industries. While infrastructure revenue can be cyclical and tied to product refresh cycles, the company pointed to continued adoption of newer mainframe generations and related software, which can produce spikes in revenue during launch periods and create pull-through demand for associated services, as noted during management commentary around the 2023 and early 2024 results presented on 01/24/2024 and 04/30/2024, according to Reuters as of 01/24/2024.

Within software and consulting, generative AI and data platforms are increasingly flagged as incremental growth drivers. IBM has been rolling out its watsonx platform and related AI-assisted tools, aiming to help enterprises build, scale and govern AI applications. In its 2024 guidance commentary, the company described AI as a multi-year opportunity layered on top of existing cloud and software revenue, but also noted that monetization would be gradual as clients move from pilot projects to broader deployment. These dynamics place IBM among a group of established technology vendors seeking to translate AI buzz into durable revenue, a point that has attracted attention from institutional investors in the United States and abroad.

Industry trends and competitive position

IBM operates in a competitive landscape that includes hyperscale cloud providers, global consulting firms and enterprise software vendors. In hybrid cloud, the company positions itself as a partner that can integrate workloads across multiple environments rather than focusing solely on public cloud infrastructure. This approach targets enterprises that want flexibility and regulatory control, especially in sectors like banking and healthcare. Industry research from firms such as Gartner and IDC, published over recent years, has highlighted the ongoing shift from traditional data centers to hybrid and multi-cloud configurations, a trend that underpins IBM’s strategic direction, although specific market share figures can vary by segment and region.

Competition is intense in consulting and managed services, where IBM faces both global incumbents and specialized boutiques. The company has responded with targeted acquisitions and partnerships to deepen its capabilities in cloud, cybersecurity and data analytics. In software, IBM’s Red Hat unit competes with proprietary and open-source platforms that support containerized workloads, but benefits from a large ecosystem and from enterprises seeking vendor-neutral solutions. Management has repeatedly stressed that open-source technologies, standardized architectures and strong security features are critical differentiators in winning large transformation projects, as underlined in commentary surrounding the 2023 annual report and 2024 outlook presentations, according to IBM investor relations as of 02/01/2024.

Artificial intelligence has become a central theme across the technology industry, and IBM is positioning watsonx as a platform to help clients train and deploy models on their preferred infrastructure, including on-premises environments for sensitive data. The company emphasizes governance, security and industry-specific use cases rather than focusing solely on consumer-facing AI. For US and European investors, this enterprise orientation can be relevant when assessing IBM’s exposure to regulatory regimes and data protection rules. While the broader AI market remains highly competitive, the company’s long-standing relationships with large corporate and government clients provide a channel through which new AI capabilities can be introduced and scaled over time.

Conclusion

International Business Machines Corporation remains in the midst of a long-running transformation from a hardware-focused legacy player to a software, services and hybrid cloud company with growing exposure to artificial intelligence. Recent quarterly updates from early 2024 show that software and consulting continue to drive revenue and that Red Hat is a central growth engine, while infrastructure retains a supporting role. For US investors, the stock offers exposure to enterprise IT spending, hybrid cloud adoption and AI-driven modernization projects, but also faces competitive pressures and execution risks as clients reassess technology priorities and budgets. How successfully IBM converts its pipeline in AI and hybrid cloud into sustained earnings growth will likely remain a core question for the market over the coming quarters.

Disclaimer: This article does not constitute investment advice. Stocks are volatile financial instruments.