IBM Slashes Jobs as Software Pivot Accelerates--Wall Street Cheers the Shakeup

This article first appeared on GuruFocus.

IBM (NYSE:IBM) is tightening its belt as it doubles down on software and AI. The tech giant plans to cut thousands of jobs this quarter a low single-digit percentage of its global workforce as part of a broader realignment toward higher-margin, faster-growth businesses. A company spokesperson said the move comes after a routine review of operations, adding that while some U.S. roles could be affected, overall domestic headcount is expected to stay roughly flat compared with last year.

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CEO Arvind Krishna's bet is simple: transform IBM from a legacy consulting powerhouse into a software-led growth machine. The shift, powered by acquisitions like Red Hat and HashiCorp, has made software IBM's biggest division and the one drawing the most investor attention. As consulting demand softens amid macroeconomic caution, Krishna's focus on hybrid cloud and AI-driven services could be what keeps IBM in the growth conversation through the next cycle.

Investors have responded positively so far. IBM shares have advanced this year on expectations that its pivot to AI and subscription-based software could accelerate margins and stabilize earnings. With roughly 270,000 employees at the end of 2024, the coming job cuts signal not contraction but recalibration a bet that a leaner, software-first IBM could be better positioned for the next leg of enterprise technology growth.

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