IBM saw revenue climb four percent in the last quarter on the back of growing demand for generative AI and hybrid cloud services.

Big Blue reported revenue of $17.4bn for the fourth period of its 2023 financial year, beating most analyst estimates. Its annual financial results, also released late on Wednesday, show it brought in $61.9bn in 2023, up two percent year-on-year, with net income of $7.5bn.

An IBM server hall – IBM

The company’s share price rose five percent in extended trading on Wednesday following the results announcement, and is now at its highest level for almost a decade.

IBM rides the generative AI wave

IBM CEO Arvind Krishna said demand for the company’s AI products is growing rapidly. Last year, the company launched watsonx, an enterprise platform offering access to a range of foundation AI models.

“We grew revenue in all of our segments, driven by continued adoption of our hybrid cloud and AI offerings,” Krishna said. “Client demand for AI is accelerating and our book of business for watsonx and generative AI roughly doubled from the third to the fourth quarter.”

AI spending was split across the company’s software and consulting divisions, CFO James Kavanaugh said in an interview with Reuters. Software, IBM’s biggest unit by revenue, brought in $7.5bn in the fourth quarter, up three percent, while consulting revenue grew 5.8 percent, to $5bn.

Meanwhile, IBM’s infrastructure business was worth $4.6bn, up 2.7 percent year-on-year. Within this, revenue from the vendor’s zSystems mainframe range grew eight percent.

Speaking on a call with investors, Krishna said an increasing number of IBM customers were utilizing hybrid IT set-ups, with a mixture of cloud and on-premises digital infrastructure, and that the company was well-placed to capitalize on this.

“I think most of our clients now acknowledge that a hybrid environment is their reality, meaning multiple public clouds and their own data centers [which] are private,” Krishna said.

IBM cloud users face disruption during data center upgrade

Meanwhile, IBM has announced it is upgrading one of its data centers in Toronto, and customers could experience disruption as a result.

The company is advising IBM Cloud customers running Power Systems Virtual Servers in its Toronto Canada (TOR01) data center that their virtual machines will be migrated to the new infrastructure at some time between February 12 and March 1.

Customers will be assigned five-hour timeslots, during which up to two virtual machines will be moved, the advisory said. VMs must be stopped during this time and can only be switched back on when the migration is complete.

What’s more, March 15 will see networking equipment at the data center upgraded. Users will need to “establish redundant network links as a preventative measure” or face network outages of up to six hours, the IBM advisory added.

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