Firing on All Cylinders: IBM (NYSE:IBM) Q4 Results Set the Benchmark

Q4 Review: IT Services & Consulting Sector Performance

As we reflect on the fourth quarter earnings for IT services and consulting companies, we highlight the top and bottom performers, including IBM (NYSE:IBM) and its industry counterparts.

The IT services and consulting sector is positioned to capitalize on growing corporate interest in digital transformation, AI-powered automation, and enhanced cybersecurity. Many organizations rely on external expertise for both strategic guidance and hands-on implementation, as these initiatives often exceed their internal capabilities. However, the industry faces hurdles such as a shortage of specialized talent, the risk of certain consulting roles becoming commoditized due to AI and automation, and ongoing pricing competition from offshore providers who benefit from lower labor costs and access to advanced technologies.

Across the seven IT services and consulting stocks we monitor, Q4 results were mixed. Collectively, these companies surpassed revenue forecasts by 0.6%, while guidance for the next quarter remained consistent with expectations.

Despite these results, share prices have struggled, with the group averaging a 26.6% decline since their latest earnings announcements.

Top Performer: IBM (NYSE:IBM)

With over 100 years of history and a legacy rooted in mainframe computing, IBM (NYSE:IBM) now delivers hybrid cloud platforms, AI solutions, consulting, and enterprise infrastructure to support business modernization.

IBM posted $19.69 billion in revenue for the quarter, marking a 12.1% increase year-over-year and exceeding analyst projections by 2.5%. The company not only outperformed revenue estimates but also delivered higher-than-expected earnings per share.

Arvind Krishna, IBM’s chairman, president, and CEO, commented, “In the fourth quarter, we achieved robust revenue growth, highlighted by double-digit gains in our Software segment. Infrastructure also maintained strong double-digit growth, driven by widespread adoption of our latest mainframe platform. Our generative AI business has now surpassed $12.5 billion. This capped off a strong 2025 for IBM, with results exceeding targets for revenue, profit, and free cash flow.”

IBM delivered the largest positive surprise relative to analyst estimates among its peers. However, investor expectations may have been even higher than those reflected in Wall Street forecasts, leading to some disappointment. Since reporting, IBM shares have fallen 19.2% and are currently trading at $237.67.

Curious if IBM is a buy right now?

EPAM (NYSE:EPAM)

Founded in 1993 at the dawn of offshore software development, EPAM Systems (NYSE:EPAM) specializes in digital engineering, cloud, and AI transformation services, helping both large enterprises and startups upgrade their technology and develop digital products.

EPAM reported $1.41 billion in revenue, representing a 12.8% year-over-year increase and surpassing analyst expectations by 1.1%. The company also delivered a solid beat on full-year EPS guidance.

EPAM led its peer group in revenue growth this quarter. Despite this, the market reacted negatively, with shares dropping 22.5% since the earnings release. The stock is currently priced at $129.90.

Wondering if EPAM is a good investment?

Lowest Performer: Kyndryl (NYSE:KD)

Spun off from IBM’s managed infrastructure services division in 2021, Kyndryl (NYSE:KD) has become the world’s largest provider of IT infrastructure services, designing and managing technology environments for enterprise clients.

Kyndryl generated $3.86 billion in revenue, a 3.1% year-over-year increase, but missed analyst forecasts by 1%. The quarter was disappointing, with both revenue and earnings per share falling short of expectations.

Kyndryl posted the weakest performance relative to analyst estimates among its peers. As anticipated, the stock has declined 48.9% since the results and is now trading at $12.

ASGN (NYSE:ASGN)

Originally focused on IT staffing, ASGN (NYSE:ASGN) has evolved into a leading provider of specialized IT consulting and staffing solutions for Fortune 1000 companies and U.S. federal agencies.

ASGN reported $980.1 million in revenue, unchanged from the previous year but slightly ahead of analyst estimates by 0.6%. The quarter was mixed, with a notable beat on next quarter’s EPS guidance but a significant miss on current EPS estimates.

Shares of ASGN have fallen 22.9% since the earnings announcement and are now valued at $41.06.

DXC (NYSE:DXC)

Formed by the 2017 merger of Computer Sciences Corporation and HP Enterprise’s services division, DXC Technology (NYSE:DXC) is a global IT services provider focused on transforming business technology, applications, and operations.

DXC’s revenue came in at $3.19 billion, flat year-over-year and in line with analyst expectations. The company beat EPS estimates for the quarter but missed next quarter’s EPS guidance by a significant margin.

DXC experienced the slowest revenue growth among its peers. The stock has dropped 15.9% since reporting and is currently priced at $12.12.

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