By Chicago Times Magazine –

January 29, 2026

International Business Machines Corp. reported a surge in fourth-quarter earnings on Wednesday, punctuated by double-digit growth in its software and infrastructure divisions and a massive expansion of its generative artificial intelligence business. The technology giant posted quarterly revenue of $19.7 billion, a 12 percent increase over the previous year, capping off a 2025 fiscal year that exceeded internal expectations for profit and cash flow.

The company’s profitability also showed marked improvement, with GAAP gross profit margins rising to 60.6 percent. For the full year, IBM generated $67.5 billion in total revenue and $14.7 billion in free cash flow, the latter representing a $2.0 billion increase over 2024. James Kavanaugh, IBM’s senior vice president and chief financial officer, emphasized the company’s “durability and resilience,” noting that disciplined execution and productivity gains allowed the firm to return $1.6 billion in dividends to shareholders in the final quarter alone.

Looking ahead to 2026, IBM leadership expressed confidence in continued momentum. The company issued guidance expecting full-year constant currency revenue growth of more than 5 percent and an additional $1 billion increase in year-over-year free cash flow. Despite a slight decrease in cash on hand, which ended the year at $14.5 billion, and a total debt load of $61.3 billion, executives maintained that the company is positioned for strength as it continues to invest in next-generation platforms.

Founded in 1911 as the Computing-Tabulating-Recording Company (CTR) through a merger of several small firms, the business was rebranded as International Business Machines in 1924 under the leadership of Thomas J. Watson. Initially focused on punch-card tabulating machines and commercial scales, the company evolved into a global powerhouse by pioneering the mainframe era with the System/360 in the 1960s and later legitimizing the personal computer market with the IBM PC in 1981. Over the decades, “Big Blue” has undergone several massive transformations, shifting its core focus from hardware manufacturing to software and services, and more recently, positioning itself as a leader in hybrid cloud and artificial intelligence. Despite intense competition and various industry shifts, IBM remains one of the world’s most enduring technology institutions, bolstered by a legacy of scientific achievements including the invention of the automated teller machine (ATM), the floppy disk, and numerous Nobel Prize-winning research projects.