IBM says AI is insane in the mainframe as z17 sales surge
(2026/01/29)
- Reference: 1769701402
- News link: https://www.theregister.co.uk/2026/01/29/ibm_q4_2025/
- Source link:
IBM's leader has trumpeted an AI-on-the-mainframe future as generative AI fills in the COBOL gap left by earlier generations of techies.
Arvind Krishna, IBM chairman, president, and chief executive officer, was speaking as the company turned in full-year results that showed a leap in mainframe sales.
Big Blue turned in revenue from continuing operations of $19.7 billion for the fourth quarter, up 12 percent on the year, yielding net income of $5.6 billion, up 91 percent. For the full year, revenue was up 8 percent to $67.5 billion, while net income jumped 76 percent to $10.6 billion.
[1]
Naturally, AI featured heavily as the firm briefed analysts on the numbers. "Our cumulative GenAI book of business now stands at over $12.5 billion, of which Software is more than $2 billion and Consulting is more than $10.5 billion, with both seeing the largest quarterly increase to date," said Krishna.
[2]
[3]
He said the technology was also a "powerful productivity driver" for the firm itself. "In 2023, we set out on a goal to achieve $2 billion of productivity savings exiting 2024. And today, we are well ahead of that, exiting 2025 with $4.5 billion of annual run rate savings."
However, the strongest growth came in IBM's infrastructure business, which grew revenues 12 percent for the year, and 21 percent in the fourth quarter.
[4]
Software grew 11 percent for the full year, and 14 percent in the fourth quarter. Consulting was the laggard, up 2 percent for the year and 3 percent in the fourth quarter – or flat and 1 percent at constant currency respectively.
That infrastructure boost was in large part powered by the launch of IBM's z17 series of mainframes.
[5]IBM's AI agent Bob easily duped to run malware, researchers show
[6]IBM straps AI to Db2 console in bid to modernize the old warhorse
[7]IBM drops $11B on Confluent to feed next-gen AI ambitions
[8]IBM cutting several thousand jobs in latest layoffs
In his prepared remarks, Krishna said: "Innovation value can also be seen in our IBM Z performance, up 48 percent this year, achieving the highest annual revenue for Z in about 20 years."
CFO James Kavanaugh referred to a "record z17 launch, achieving the highest annual revenue for IBM Z in about 20 years and outpacing z16 over the first three quarters of the program."
Krishna said this was more than just a question of legacy replacements. He said sovereignty was a key issue, and "more and more clients have woken up to that for certain workloads, the mainframe is actually the lowest unit cost economics platform, and that is really important."
[9]
At the same time, he said GenAI made mainframes easier to leverage and modernize. "The GenAI tools we have provided with the Watson Code Assistant for Z really takes that onus away. It can refactor COBOL into Java... It can help you refactor that code if you want to keep it exactly as it is."
He added: "I'm incredibly excited by our ability to do AI right in line. If you can do it right in line with the transactions, that's a milliseconds delay as opposed to multiple seconds if you take it off platform, which is how people have been doing it so far."
But if the mainframe is set to be part of the AI future, some other legacy issues are also set to stick with us.
Asked if AI/HBM-fueled DRAM price hikes were a problem, Krishna said: "I personally believe, as long as that dynamic is there, those pricing issues are going to be there through the year."
He added: "There is no AI server without a bunch of CPUs right next to it. So the reality becomes that the AI demand also drives demand for normal servers that in turn feed and load up those servers." ®
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[5] https://www.theregister.com/2026/01/07/ibm_bob_vulnerability/
[6] https://www.theregister.com/2025/12/08/ibm_db2_intelligence_center/
[7] https://www.theregister.com/2025/12/08/ibm_drops_11b_on_confluent/
[8] https://www.theregister.com/2025/11/04/ibm_cutting_several_thousand_jobs/
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Arvind Krishna, IBM chairman, president, and chief executive officer, was speaking as the company turned in full-year results that showed a leap in mainframe sales.
Big Blue turned in revenue from continuing operations of $19.7 billion for the fourth quarter, up 12 percent on the year, yielding net income of $5.6 billion, up 91 percent. For the full year, revenue was up 8 percent to $67.5 billion, while net income jumped 76 percent to $10.6 billion.
[1]
Naturally, AI featured heavily as the firm briefed analysts on the numbers. "Our cumulative GenAI book of business now stands at over $12.5 billion, of which Software is more than $2 billion and Consulting is more than $10.5 billion, with both seeing the largest quarterly increase to date," said Krishna.
[2]
[3]
He said the technology was also a "powerful productivity driver" for the firm itself. "In 2023, we set out on a goal to achieve $2 billion of productivity savings exiting 2024. And today, we are well ahead of that, exiting 2025 with $4.5 billion of annual run rate savings."
However, the strongest growth came in IBM's infrastructure business, which grew revenues 12 percent for the year, and 21 percent in the fourth quarter.
[4]
Software grew 11 percent for the full year, and 14 percent in the fourth quarter. Consulting was the laggard, up 2 percent for the year and 3 percent in the fourth quarter – or flat and 1 percent at constant currency respectively.
That infrastructure boost was in large part powered by the launch of IBM's z17 series of mainframes.
[5]IBM's AI agent Bob easily duped to run malware, researchers show
[6]IBM straps AI to Db2 console in bid to modernize the old warhorse
[7]IBM drops $11B on Confluent to feed next-gen AI ambitions
[8]IBM cutting several thousand jobs in latest layoffs
In his prepared remarks, Krishna said: "Innovation value can also be seen in our IBM Z performance, up 48 percent this year, achieving the highest annual revenue for Z in about 20 years."
CFO James Kavanaugh referred to a "record z17 launch, achieving the highest annual revenue for IBM Z in about 20 years and outpacing z16 over the first three quarters of the program."
Krishna said this was more than just a question of legacy replacements. He said sovereignty was a key issue, and "more and more clients have woken up to that for certain workloads, the mainframe is actually the lowest unit cost economics platform, and that is really important."
[9]
At the same time, he said GenAI made mainframes easier to leverage and modernize. "The GenAI tools we have provided with the Watson Code Assistant for Z really takes that onus away. It can refactor COBOL into Java... It can help you refactor that code if you want to keep it exactly as it is."
He added: "I'm incredibly excited by our ability to do AI right in line. If you can do it right in line with the transactions, that's a milliseconds delay as opposed to multiple seconds if you take it off platform, which is how people have been doing it so far."
But if the mainframe is set to be part of the AI future, some other legacy issues are also set to stick with us.
Asked if AI/HBM-fueled DRAM price hikes were a problem, Krishna said: "I personally believe, as long as that dynamic is there, those pricing issues are going to be there through the year."
He added: "There is no AI server without a bunch of CPUs right next to it. So the reality becomes that the AI demand also drives demand for normal servers that in turn feed and load up those servers." ®
Get our [10]Tech Resources
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[5] https://www.theregister.com/2026/01/07/ibm_bob_vulnerability/
[6] https://www.theregister.com/2025/12/08/ibm_db2_intelligence_center/
[7] https://www.theregister.com/2025/12/08/ibm_drops_11b_on_confluent/
[8] https://www.theregister.com/2025/11/04/ibm_cutting_several_thousand_jobs/
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[10] https://whitepapers.theregister.com/
Re: Lies, damned lies, and quarterly investor calls
Anonymous Crowbar
From what i remember when I worked in a software dev shop with both Unix and Z, we got new [almost] fully kitted out mainframes every refresh, and billed close to list price, but as we were a partner we didnt _actually_ pay. I don't actually remember how it worked, and it was 15+ yrs ago.
[Hilariously I more remembeer having to get strutctural engineers from the business park invloved as their weight could have collapsed the walkway over a water feature into the building, so we ended up removing part of the roof and getting it in via cherry picker. In the middle of Jan in Ireland. Which is pretty damn windy. I was convinced the thing was gonna fall it was swaying so much]
I have always been sceptical on the Z revenue reports because of this, as at least back then it a common occurance from talking to others.
Lies, damned lies, and quarterly investor calls
Classic IBM: "whatever happened this quarter, it's because we're at the forefront of whatever the current buzzword is."
So IBM had a surge in mainframe sales with the launch of a new z17 upgrade, exactly as it always does. And it's attributing it to AI. Even though the z16 already had the AI enhancements, and the z17 offers marginal improvements in AI-specific capabilities.
Also, these two statements become much more interesting when you put them side by side:
"Our cumulative GenAI book of business now stands at over $12.5 billion, of which Software is more than $2 billion and Consulting is more than $10.5 billion"
"Consulting [growth] was the laggard, up 2 percent for the year"
So did AI consulting really blow up, or did salespeople realize they could get a kicker on their quota fulfillment for tagging every possible consulting gig as AI? Not that I'm suggesting that IBM would ever do such a thing, and certainly not that it has ever done so before.
("Cumulative" is also an interesting word in there. Cumulative since when? I'll let somebody else attempt to parse that out.)
Possibly the best thing IBM has going for it right now is that it missed out so badly on the Cloud transformation, it isn't pouring hundreds of billions into datacenter buildouts right now. That might be serendipitous.