Written By International Business Machines Corp. (IBM), one of the world’s leading technology companies, has announced that it expects its sales to grow in the second half of this year, despite reporting modest growth for the full year. The company, which provides hardware, software, and services to businesses and governments, has struggled to keep up with competitors in recent years, but is hoping to turn things around with its focus on hybrid cloud computing and artificial intelligence.
In its second-quarter earnings report, IBM announced revenue of $18.75 billion, a 3% increase from the same period last year, but below analysts’ expectations. The company’s earnings per share were $2.33, beating estimates of $2.29. Despite the relatively weak performance, IBM’s executives remain optimistic about the company’s future.
“We see a lot of momentum building in the second half of the year,” said Arvind Krishna, IBM’s CEO. “We have strong confidence in our ability to achieve revenue growth this year.”
Krishna noted that the company’s hybrid cloud and AI offerings have been particularly successful, with cloud revenue up 13% and AI revenue up 23% year-over-year. These areas are expected to be key drivers of growth for the company going forward.
IBM has been shifting its focus away from traditional hardware and software sales and towards cloud computing and AI in recent years, as it attempts to catch up with competitors like Amazon Web Services and Microsoft Azure. The company has made several high-profile acquisitions in these areas, including Red Hat, which it acquired for $34 billion in 2019.
IBM’s focus on hybrid cloud, which combines public and private cloud offerings, is seen as a key differentiator from its competitors. The company believes that many businesses will want to keep some of their data and applications on-premises, rather than moving everything to the public cloud.
Despite IBM’s optimistic outlook, some analysts remain skeptical about the company’s ability to compete in the highly competitive cloud market. “IBM’s growth story is still a work in progress,” said Harsh Kumar, an analyst at Piper Sandler.
Others are more bullish on the company’s prospects. “IBM has a good chance of competing in the cloud space because of its long-standing relationships with enterprise customers,” said Timothy Chubb, an analyst at New Street Research.
Regardless of the outcome, it is clear that IBM is betting big on cloud computing and AI as it seeks to return to growth. The company’s success or failure in these areas could have significant implications not only for IBM, but for the entire tech industry.
