(Reuters)-BIBM (IBM) exceeded the estimates of analysts for profit on the fourth quarter on Wednesday, driven by the demand in his software unit with high margins while companies released the expenditure, which made its shares about 10% in extensive trade .
The company’s software segment registered its largest sales jump in five years, because customers gave priority to spending on cloud infrastructure in the midst of a hurry to use the data-intensive generative artificial intelligence technology.
The AI-business book of IBM-a combination of bookings and actual sales in various products-clog more than $ 5 billion to the present, an increase of around $ 2 billion from the third quarter.
In May, the company made its “Granite” family of AI models open source, in contrast to rivals such as Microsoft, which are charged for access to their models.
IBM’s approach is in line with the Chinese Startup Deepseek, which last week launched a free AI assistant, which it said that it uses less data against a fraction of the costs of established services, so that concern about the dominance of American technology is fueled.
“Deepseek was an initiation that open (source) AI can play a role in the general Genai space,” IBM Chief Financial Officer James Kavanaugh told Reuters in an interview.
However, he refused to provide details about whether IBM is planning to offer Deepseek’s models on his Watsonx platform, with which users can improve code for AI programs or implement chatbots.
The AI book of IBM is dominated by Consulting, which is currently around 80%. Software is only one fifth.
The turnover from the advice segment fell by approximately 2% to $ 5.2 billion in the quarter, more than the expectation of analysts of a decrease of around 1%.
Companies have the expenditure aimed at Consulting Deals in the longer term, aimed at integrating AI into their companies, which still has to be reflected in the income of IBM.
The total turnover was relatively flat at $ 17.55 billion for the quarter and largely in line with the estimates of analysts, according to data drawn up by LSEG.
The revenue growth of the software of more than 10% was also partially prevented by weakness in the infrastructure segment, which registered a decrease in the turnover of almost 8%, since the mainframe-business is confronted with a lukewarm demand on the back of older products.
IBM achieved adjusted income per share of $ 3.92 for the quarter ending in December, compared to the average estimate of analysts of $ 3.75.
(Reporting by Arsheya Bajwa in Bengaluru; Edit by Shilpi Majumdar)
