International Business Machines Corporation IBM is scheduled to report fourth-quarter 2024 earnings on Jan. 29, 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.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Factors at Play
The Software segment includes Hybrid Platform & Solutions comprising software services, Red Hat, automation and data & artificial intelligence (AI) businesses and Transaction Processing.
During the quarter, IBM introduced the IBM Guardium Data Security Center, designed to help organizations secure their data in diverse environments throughout its lifecycle with integrated controls. The platform features a single dashboard consolidating all data assets, allowing security teams to streamline monitoring, governance, detection, AI security management and cryptography workflows.
IBM unveils significant advancements in its quantum software and hardware platforms. New capabilities in IBM Qiskit software will facilitate the development of next-generation algorithms and better equip quantum computers to tackle scientific problems across materials, chemistry, life sciences and more.
In the to-be-reported quarter, IBM acquired Prescinto, a prominent provider of asset performance management software-as-a-service tailored for the renewable energy industry. With AI at the core, Prescinto’s cutting-edge technology addresses some vital functionalities of asset performance management in the renewable energy sector.
IBM’s asset lifecycle management product Maximo Application Suite (MAS) already has a strong market presence across several sectors such as water, oil, natural gas and nuclear energy. The integration of Prescinto’s technology will further augment the capabilities of IBM MAS, strengthen its position in the energy and utility sector and reinforce IBM’s ability to support the enterprise’s sustainability goals.
In the quarter under review, IBM has entered a strategic partnership with Lockheed Martin, a global leader in defense technology. Lockheed Martin has opted to integrate IBM’s high-performance, enterprise-grade, cost-efficient Granite large language models to expedite AI-driven innovation in aerospace and defense applications. These are likely to have translated into incremental revenues in the Software segment.
Overall Expectations for IBM
The Zacks Consensus Estimate for Software revenues is pegged at $7.82 billion, indicating an improvement from $7.51 billion in the year-ago quarter. Our estimate for revenues from Software is pegged at $7.42 billion, suggesting a 3.5% rise year over year.
The Zacks Consensus Estimate for total revenues for the company stands at $17.56 billion. It generated revenues of $17.38 billion in the prior-year quarter. The consensus mark for earnings is currently pegged at $3.74 per share, indicating a decline from $3.87 in the year-earlier quarter.
IBM's Earnings Whispers
Our proven model predicts a likely earnings beat for IBM for the fourth quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is exactly the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
IBM has an ESP of +0.31% with a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Stocks to Consider
Here are some companies you may consider, as our model shows that these have the right combination of elements to post an earnings beat this season:
PayPal Holdings, Inc. PYPL is scheduled to report quarterly numbers on Feb. 4. The Earnings ESP for the company is +0.84% and it carries a Zacks Rank of 3 at present.
The Earnings ESP for Qualcomm Technologies, Inc. QCOM is +3.34% and it carries a Zacks Rank of 2 at present. The company is scheduled to report its quarterly numbers on Feb. 5.
The Earnings ESP for Charter Communications CHTR is +1.92% and it carries a Zacks Rank of 3 at present. The company is scheduled to report its quarterly numbers on Jan. 31.
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