IBM (IBM +13%) hit a new all-time high following its robust Q4 results. The company reported a significant EPS beat, marking only its second double-digit EPS beat in the past six quarters. Revenue increased by 1% year-over-year to $17.55 billion, aligning with expectations. The upbeat guidance seems to be driving today's stock surge.

• IBM's FY25 guidance projects a 5% constant currency (CC) sales growth, an improvement from FY24's 3% CC growth. Additionally, FY25 free cash flow is forecasted at $13.5 billion, up from FY24's $12.7 billion.
• The Software segment was a standout, with revenue climbing 10.4% (11.5% CC) to $7.9 billion. Key areas like Red Hat (+17% CC), Automation (+16% CC), Data & AI (+5% CC), and Transaction Processing (+11% CC) showed considerable growth. Software now constitutes about 45% of IBM's business, with more than $15 billion of annual recurring revenue (ARR) growing at double digits.
• Red Hat continues to gain momentum, marked by six consecutive quarters of double-digit bookings growth. This reflects ongoing demand for IBM's hybrid cloud platform, as clients focus on application modernization with OpenShift containers and Ansible automation. OpenShift has become a $1.4 billion ARR business, growing at approximately 25%.
• Consulting segment revenue decreased by 2% (1.1% CC) to $5.2 billion, as clients shift IT spending towards digital transformation and AI for cost efficiency. Infrastructure segment revenue fell by 7.6% (6% CC) to $4.3 billion, influenced by product cycle dynamics. IBM noted that the z16 product cycle has outpaced previous cycles, now in its 11th quarter of availability.
• IBM's FY25 revenue guidance by segment anticipates Software nearing double-digit growth, driven by Red Hat in the mid-teens. Consulting is expected to grow in the low single digits, while a new mainframe launch in mid-2025 is projected to contribute about a point to overall revenue growth.

In summary, IBM concluded FY24 on a high note, with its Software segment continuing to drive robust growth, now accounting for 45% of total sales. The optimistic FY25 guidance, suggesting a 5% CC revenue growth, is significant as IBM hasn't achieved this level of growth in any quarter since Q3 2022. This early forecast indicates management's confidence in the company's future prospects, particularly in its booming Software segment.