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International Business Machines Corporation IBM is scheduled to report first-quarter 2025 results on April 23, after the closing bell. In the to-be-reported quarter, the company is likely to have recorded higher revenues from the Software segment with a strong focus on product innovation and healthy AI traction across various sectors.
Factors at Play
IBM’s Software segment includes Hybrid Platform & Solutions and Transaction Processing, focusing on technologies that enhance enterprise productivity and innovation. It delivers value through four key areas: Transaction Processing, which supports critical workloads on IBM Z with high security and availability; Automation, which streamlines operations and reduces complexity; Data and AI, which embed intelligence into applications for real-time decision-making; and the Hybrid Cloud Platform (Red Hat), which enables seamless application and AI deployment across diverse environments. All offerings are designed for hybrid cloud use and integrate security and AI by default.
In the to-be-reported quarter, IBM completed the acquisition of California-based software company HashiCorp Inc. for an enterprise value of $6.4 billion. The acquisition has brought powerful synergies across key strategic growth areas of IBM, such as Red Hat, watsonx, and IT automation solutions. HashiCorp’s tools, Terraform and Vault, have been integrated with IBM’s Red Hat platforms to enhance cloud infrastructure management and hybrid cloud security, including for IBM Z. The addition of the new cutting-edge products has significantly improved IBM Software’s ability to help organizations optimize IT spending, reduce cloud costs, and improve overall efficiency through automation.
In the first quarter, IBM entered into a strategic partnership with Telefonica, a Spanish multinational telecommunications company. Per the collaboration, Telefonica will integrate IBM’s quantum-safe enterprise software technology into its cybersecurity services to develop robust security solutions that safeguard businesses and public institutions from the risks of quantum computing threats. L'Oreal has also deployed IBM’s state-of-the-art generative AI technology solutions to enhance its cosmetic formulation processes. These developments are likely to have had a favorable effect on the company’s first-quarter performance.
Mitsubishi Motors, a dominant player in the Canadian auto market, has leveraged IBM’s watsonx portfolio to develop an AI-native customer interaction solution called Intelligent Companion. By combining Lenovo’s infrastructure solutions within its watsonx AI portfolio, IBM is delivering tailored AI solutions for distinct requirements in Saudi Arabia. These developments are likely to have supported the top line in the Software segment.
In the March quarter, IBM extended its collaboration with NVIDIA Corporation to scale AI workloads and agentic AI applications. Per this extended agreement, IBM will launch a content-aware storage capability for its hybrid cloud infrastructure offering (dubbed IBM Fusion) and expand its watsonx integrations with NVIDIA while introducing new IBM Consulting capabilities. This advancement is likely to have generated incremental revenues for IBM in the upcoming quarter, propelling its stock momentum.