IBM reported higher-than-expected revenue and profit in Q4 with $19.69 billion in revenue and adjusted earnings of $4.52 per share. The company’s software segment saw sales of $9.03 billion, driven by strong growth in its Automation and Data units. IBM is focusing on AI with acquisitions like HashiCorp and Confluent for $6.4 billion and $11 billion respectively.

Despite strong performance, IBM’s high-margin hybrid cloud unit, Red Hat, saw slower growth at 10% in Q4. The slowdown was attributed to the impact of the US government shutdown in late 2025, which affected about 15% of its hybrid cloud bookings. CFO Jim Kavanaugh expressed hope for a quick resolution to prevent further disruptions.

IBM’s “AI book of business” grew to $12.5 billion in Q4, a $3 billion increase from the previous quarter. The company plans to stop reporting this metric separately from the first quarter onwards. IBM continues to focus on AI-driven software services to meet the growing demand in the market, driven by businesses upgrading their software suites for AI technology.

Read more at Yahoo Finance: IBM beats fourth-quarter revenue estimates as AI clamor boosts software demand