Wall Street Breakfast
IBM fails to shake DOGE worries
Apr 24, 2025
IBM faces challenges as consulting woes overshadow strong software growth. The discussion shifts to whether it's time to invest in gold after its largest drop in four years. Exciting news emerges from Tesla as they kick off tests for their robotaxi initiative. Additionally, whispers about Trump considering auto tariff relief and insights on Netflix's ambitions for a staggering $1T valuation add to the intriguing mix.
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Quick takeaways
- IBM's consulting business is facing a decline due to economic uncertainties, impacting overall stock performance despite strong software growth.
- Tesla's robo-taxi service testing highlights competition in the ride-hailing market, aiming for a broader launch by summer 2025.
Deep dives
IBM's Consulting Business Challenges
IBM faces concerns regarding its consulting business which has seen a decline of 2% to $5.068 billion, overshadowing a 7% increase in software revenue. Analyst Utam Day pointed out that while IBM demonstrated strength in its software sector, particularly with Red Hat's growth, the pressures within consulting could keep the stock stagnant. CEO Arvind Krishna noted that uncertainties may lead clients to adopt a wait-and-see approach, consequently impacting consulting revenue more significantly. CFO James Kavanaugh emphasized that certain areas of their portfolio are vulnerable to macroeconomic variability, especially consulting services highly sensitive to discretionary spending and current policy shifts.
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