artificial \u200cintelligence<\/a> tools and sending its shares down 6.5% after hours on Wednesday.<\/p>\nConcerns \u200cthat AI will eat into the software business have grown with the launch of tools that can automate \u200broutine corporate functions.<\/p>\n
IBM has especially been hit after Anthropic said in February one of its tools could help modernize COBOL, a language widely used on the company’s mainframes.<\/p>\n
Big Blue’s revenue increased 9% in the first quarter to $15.92 billion, slower than the 12.2% growth in the \u200cprevious quarter, even as it \u2060surpassed analysts’ average estimate of $15.62 billion, according to data compiled by LSEG.<\/p>\n
IBM’s software segment, anchored by its high-margin hybrid cloud unit Red Hat, \u2060and a suite of AI tools under the Watsonx brand, also posted slower revenue growth of 11.3%.<\/p>\n
“The stakes around these results were higher than normal given the software\/services selling pressure \u200bthe market \u200bhas seen this year amid AI competition fears, \u200band we do not think Q1\u2019s \u200cresults validated those fears,” CFRA analyst Brooks Idlet said.<\/p>\n
Growth in the company\u2019s infrastructure segment remained strong, helped by continued adoption of its latest mainframe systems. Revenue in the segment, which includes mainframe computers, grew 15.2% to $3.33 billion in the quarter.<\/p>\n
Analysts have said IBM’s deep customer ties and AI offerings, such as the Watsonx Code Assistant, a coding \u200cmodernization tool for the mainframe, could help it against \u200brival AI tools.<\/p>\n
CFO James Kavanaugh told Reuters clients \u200busing the tool are seeing faster \u200bgrowth in mainframe consumption. “Gen AI in modernization of mainframe is actually \u200can accelerator and accretive to the mainframe \u200bportfolio overall,” he said.<\/p>\n
IBM’s \u200badjusted quarterly profit came in at $1.91 per share, compared with estimates of $1.81.<\/p>\n
On a post-earnings call, CEO Arvind Krishna downplayed the impact of the Middle East conflict, \u200bsaying that IBM had its \u200cstrongest growth in the region in decades and could absorb disruption from the \u200bclosure of the Strait of Hormuz for another few weeks.<\/p>\n
(Reporting by Anhata \u200bRooprai in Bengaluru; Editing by Maju Samuel)<\/p>\n","protected":false},"excerpt":{"rendered":"By Anhata Rooprai April 22 (Reuters) – IBM’s revenue growth slowed in the first quarter on sluggishness in…\n","protected":false},"author":2,"featured_media":622168,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[62,276,277,49,48,28471,180715,16583,61],"class_list":{"0":"post-622167","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-artificial-intelligence","8":"tag-ai","9":"tag-artificial-intelligence","10":"tag-artificialintelligence","11":"tag-ca","12":"tag-canada","13":"tag-revenue-growth","14":"tag-software-business","15":"tag-software-segment","16":"tag-technology"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/622167","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=622167"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/622167\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/622168"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=622167"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=622167"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=622167"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}