While continuing to capitalize on its Red Hat assets to drive up its hybrid cloud business, IBM appears set to reap the benefits of investing in the future of AI. The company perceives a strong future for AI and is pumping in both automation and technology to drive it.
When CEO Arvind Krishna took up the earnings calls a week ago, he expressed satisfaction in the manner in which IBM was executing on both its hybrid cloud and AI business. He noted that the company had made several changes to its portfolio and focused on investing in technical talent, on the ecosystem as well as on the go-to-market model.
Why AI makes good sense now
As much as 35% of the companies are now using some form of AI in their businesses with many even using AI and automation to address demographic shifts while moving their employees to higher value work. Krishna believes that this is one of the major reasons IBM is investing heavily in both AI and automation.
Of course, amidst all these good vibes over AI, the company did offload its once prestigious IBM Watson health business to a private equity buyer earlier in 2022. The decision to sell the company to Francisco Partners for $1 billion in January had nothing to do with IBM’s commitment to AI and for the Watson brand, Arvind Krishna had said.
Which is why IBM continues to have Watson Order and Watson AI Ops very much under the umbrella brand. While the former is being rolled out via fast food chain MacDonald’s to automate order taking, the latter aims to make IT operations more efficient. Krishna said the decision to divest Watson Health was more about exiting verticals rather than horizontals.
The monies are coming in too
Readers would recall that IBM beat quarterly earning estimates posting $15.5 billion revenues, up 9% year-on-year. It also committed to deliver full-year revenue growth projections. Of course, amidst all this, company officials also warned that the strengthening US dollar could have an impact on companies like IBM that do business across the world.
On fact, one of the high points of the latest results was IBM’s infrastructure business which saw revenues grow by 19% to $4.2 billion. This includes the Z systems mainframe division that saw revenues spike 69% due to the recent z16 launch, which introduced new capabilities like the on-chip AI inference that allows banks to run fraud detection checks on all transactions.
