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Companies are finding all sorts of ways to profit from the generative AI boom, and IBM is no exception.
IBM’s fourth-quarter book of business related to generative AI—including its AI and data platform, watsonx—roughly doubled from the “low hundreds of millions” it reported in Q3, Arvind Krishna, chairman and CEO, said during an earnings call on Wednesday.
Consulting made up two-thirds of IBM’s generative AI book of business, while software revenue and the value of its SaaS contracts with clients comprised the rest.
“We continue to have thousands of hands-on client interactions, including an acceleration in pilots that were completed during the quarter,” he said.
Krishna later clarified that the company’s book of business doesn’t account for its total quarterly revenue, but is a good measuring stick of other companies’ interest in IBM’s generative AI products, and the business opportunity it presents moving forward.
IBM is approaching generative AI with the same zeal it had for hybrid cloud architecture.
“Just as we quickly ramped a meaningful practice around Red Hat to address the hybrid cloud opportunity, we are on a similar trajectory with generative AI,” Krishna told analysts. “Consulting is a core driver of our value proposition for clients.”
IBM reported a solid Q4 and 2023. It had a Q4 gross profit margin of 59.1%, up 1.4 points year over year, and an operating margin of 60.1%, also up 1.4 points. It reported revenue of $17.4 billion, up 4% YoY. Quarterly revenue increased in all segments, including software, consulting, and infrastructure.
The company’s full-year gross profit margin stood at 55.4%, up 1.4 points YoY, and its operating margin was 56.5%, up 1.3 points from the prior year. Full-year revenue increased 3% YoY to $61.9 billion. Annual revenue was up in IBM’s software and consulting segments, but down in infrastructure. IBM’s share rose after the announcement.