IBM bets on generative AI to escape economic headwinds

IBM is betting big on generative AI to escape macroeconomic headwinds and finish the fiscal year at a high.

“Overall, we believe the tailwinds outweigh the headwinds, and technology spend will continue to outpace GDP. In this past quarter, we saw good revenue growth in software and consulting,” IBM CEO Arvind Krishna said during an earnings call.

“Clients are increasingly adopting our watsonx AI and data platform along with our hybrid cloud solutions to unlock productivity and operational efficiency. This is helping drive solid growth in our software and consulting businesses. As a result, we remain confident in our revenue and free cash flow growth expectations for the full year,” Krishna added.

IBM’s total revenue for the quarter ended September grew 4.6% year-on-year to $14.8 billion. Revenue from data and AI was up 6% year-on-year.

Big bets on generative AI

In the quarter ended September, IBM placed several large bets on generative AI after seeing demand from its customers, Krishna said during the earnings call.

“The work we are doing, clear patterns are emerging in terms of the AI enterprise use cases. Based on extensive feedback and trials to date, three have risen to the top: code modernization, customer service, and digital labor. All have broad relevance and deliver tangible business benefits,” the CEO said, adding that the company has released products to cater to these use cases in the last three months.