ao link
Business Reporter
Business Reporter
Business Reporter
Search Business Report
My Account
Remember Login
My Account
Remember Login

IBM falls as slowing enterprise spending pressure consulting growth

(Reuters) - IBM shares fell more than 6% on Thursday, as reduced enterprise spending on non-GenAI projects pressured its consulting segment, clouding software unit strength.

 

If losses hold, its $214 billion market valuation could drop by over $13 billion.

 

An uncertain economic outlook pushed IBM’s customers to reduce discretionary spending and prioritize GenAI projects, impacting growth in its consulting services. 

 

"Infrastructure, which had been strong YTD, slowed ahead of the FY/25 refresh cycle while consulting continued to see headwinds around discretionary spend reflected in declining signings," RBC Capital Markets analysts said.

 

Total revenue rose about 1% to $14.97 billion, missing estimates of $15.07 billion, according to data compiled by LSEG.

 

"The pause in discretionary spending shows continued IT budget constraints (particularly for non-AI) near term, but a glimmer of hope for 2025 growth durability," said Piper Sandler analysts.

 

IBM’s software segment, however, was a bright spot in the third quarter, achieving 9.7% revenue growth to $6.52 billion, as enterprises expand cloud infrastructure to cater to GenAI technology. 

 

The company expects revenue trends to continue in the next quarter including strength from software, but headwinds in consulting from discretionary spend and infrastructure ahead of next year’s refresh.

 

Analysts at BofA Securities expect consulting to remain weaker in the first half of 2025 but offset by accelerating software and mainframe cycle.

 

(Reporting by Harshita Mary Varghese in Bengaluru; Editing by Vijay Kishore)

Business Reporter

Winston House, 3rd Floor, Units 306-309, 2-4 Dollis Park, London, N3 1HF

23-29 Hendon Lane, London, N3 1RT

020 8349 4363

© 2024, Lyonsdown Limited. Business Reporter® is a registered trademark of Lyonsdown Ltd. VAT registration number: 830519543

We use cookies so we can provide you with the best online experience. By continuing to browse this site you are agreeing to our use of cookies. Click on the banner to find out more.
Cookie Settings