✦ The AI Book That Stopped Being CountedThin moat

IBM (IBM) — the future bets

IBM counted its AI business every quarter until it passed $12.5 billion and then stopped, leaving consulting signings as the only trace.

For two years IBM measured its AI progress with one number, and then retired it. Its generative-AI book of business, an inception-to-date total of software sales and consulting signings, was "over $5 billion" at the end of 20241, "over $6 billion" in the first quarter of 20252, "over $7.5 billion" in the second3, "over $9.5 billion" in the third4 and "more than $12.5 billion" at the end of 20255.

Generative AI book of business, inception to date ($bn)over 5Q4 2024over 6Q1 2025over 7.5Q2 2025over 9.5Q3 2025over 12.5Q4 2025IBM prepared remarks Q4 2024 to Q3 2025; Q4 2025 release
The last reading before the series ended.

About four-fifths of it came from Consulting and a fifth from Software67. It was therefore mainly a measure of advisory and implementation work on AI, not of AI software sales.

In 2026 the figure disappeared. On the first-quarter call the chief financial officer said the company had exited the year at "over $12.5 billion" and that AI was now "embedded across our portfolio"8. The first- and second-quarter releases of 2026 carry no book-of-business figure.

There is a reasonable case for dropping it: a cumulative total always rises and says little about the rate. But the timing invites scepticism, because it went away just before the quarter in which IBM missed its plan.

The growth of the book was fast while it lasted. It rose by about $2 billion in the fourth quarter of 20249, "up over $1 billion in the quarter" in the first quarter of 202510, and by $3 billion in the fourth quarter of 202511. A metric rising that quickly is usually one a company wants to keep reporting, which makes its disappearance the more notable.

The nearest replacement is Consulting signings, which Krishna said were "led by strong GenAI contribution"12; they rose 6.8% in the first half of 202613. If signings fall again in the second half, the AI demand the retired number described would be slowing.

Moat trajectory: Holding steady

Book over $12.5bn at end-2025; no longer reported.

The number that tests this moat
Reported
Consulting signings growth, first half
+6.8% to $10,388M (H1 2026)

The remaining trace of IBM's AI demand; a fall in the second half would mean the retired AI book was slowing.

Source: IBM Form 10-Q, Q2 2026 ↗
References
  1. ReportedIts generative-AI book of business, an inception-to-date total of software sales and consulting signings, was "over $5 billion" at the end of 2024, "over $6 billion" in the first quarter of 2025, "over $7.5 billion" in the second, "over $9.5 billion" in the third and "more than $12.5 billion" at the end of 2025.
    IBM fourth-quarter 2024 prepared remarks, Form 8-K exhibit 99.1 - generative AI book of business, OpenShift ARR and software ARR on the earlier definition. — Q4 2024 · publ. January 2025 · source ↗
  2. ReportedIts generative-AI book of business, an inception-to-date total of software sales and consulting signings, was "over $5 billion" at the end of 2024, "over $6 billion" in the first quarter of 2025, "over $7.5 billion" in the second, "over $9.5 billion" in the third and "more than $12.5 billion" at the end of 2025.
    IBM first-quarter 2025 prepared remarks, Form 8-K exhibit 99.1 - generative AI book of business and its software and consulting split. — Q1 2025 · publ. April 2025 · source ↗
  3. ReportedIts generative-AI book of business, an inception-to-date total of software sales and consulting signings, was "over $5 billion" at the end of 2024, "over $6 billion" in the first quarter of 2025, "over $7.5 billion" in the second, "over $9.5 billion" in the third and "more than $12.5 billion" at the end of 2025.
    IBM second-quarter 2025 prepared remarks, Form 8-K exhibit 99.1 - generative AI book of business. — Q2 2025 · publ. July 2025 · source ↗
  4. ReportedIts generative-AI book of business, an inception-to-date total of software sales and consulting signings, was "over $5 billion" at the end of 2024, "over $6 billion" in the first quarter of 2025, "over $7.5 billion" in the second, "over $9.5 billion" in the third and "more than $12.5 billion" at the end of 2025.
    IBM third-quarter 2025 prepared remarks, Form 8-K exhibit 99.1 - productivity savings and generative AI book of business. — Q3 2025 · publ. October 2025 · source ↗
  5. ReportedIts generative-AI book of business, an inception-to-date total of software sales and consulting signings, was "over $5 billion" at the end of 2024, "over $6 billion" in the first quarter of 2025, "over $7.5 billion" in the second, "over $9.5 billion" in the third and "more than $12.5 billion" at the end of 2025.
    IBM fourth-quarter and full-year 2025 results release, Form 8-K exhibit 99.1 - IBM Z growth, generative AI book of business and 2026 expectations. — FY2025 · publ. 28 January 2026 · source ↗
  6. ReportedAbout four-fifths of it came from Consulting and a fifth from Software.
    IBM fourth-quarter 2024 prepared remarks, Form 8-K exhibit 99.1 - generative AI book of business, OpenShift ARR and software ARR on the earlier definition. — Q4 2024 · publ. January 2025 · source ↗
  7. ReportedAbout four-fifths of it came from Consulting and a fifth from Software.
    IBM first-quarter 2025 prepared remarks, Form 8-K exhibit 99.1 - generative AI book of business and its software and consulting split. — Q1 2025 · publ. April 2025 · source ↗
  8. ReportedOn the first-quarter call the chief financial officer said the company had exited the year at "over $12.5 billion" and that AI was now "embedded across our portfolio".
    IBM first-quarter 2026 earnings call transcript (Motley Fool via The Globe and Mail) - the generative AI book of business now embedded across the portfolio. — Q1 2026 · publ. April 2026 · source ↗
  9. ReportedIt rose by about $2 billion in the fourth quarter of 2024, "up over $1 billion in the quarter" in the first quarter of 2025, and by $3 billion in the fourth quarter of 2025.
    IBM fourth-quarter 2024 prepared remarks, Form 8-K exhibit 99.1 - generative AI book of business, OpenShift ARR and software ARR on the earlier definition. — Q4 2024 · publ. January 2025 · source ↗
  10. ReportedIt rose by about $2 billion in the fourth quarter of 2024, "up over $1 billion in the quarter" in the first quarter of 2025, and by $3 billion in the fourth quarter of 2025.
    IBM first-quarter 2025 prepared remarks, Form 8-K exhibit 99.1 - generative AI book of business and its software and consulting split. — Q1 2025 · publ. April 2025 · source ↗
  11. Moat Explorer calcIt rose by about $2 billion in the fourth quarter of 2024, "up over $1 billion in the quarter" in the first quarter of 2025, and by $3 billion in the fourth quarter of 2025.
    Moat Explorer calculation from IBM's reported figures ($ millions unless stated). Segment mix 2025: Software 29,962 / 67,472 = 44.4% of segment revenue and 9,920 / 16,364 = 60.6% of segment profit; Consulting 21,055 / 67,472 = 31.2% and 2,464 / 16,364 = 15.1%; Infrastructure 15,718 / 67,472 = 23.3% and 3,458 / 16,364 = 21.1%; Financing 737 / 67,472 = 1.1% and 521 / 16,364 = 3.2%. Segment revenue below reported revenue: 60,530 - 59,621 = 909 (2022); 61,860 - 61,229 = 631 (2023); 62,753 - 62,510 = 243 (2024); 67,535 - 67,472 = 63 (2025). Growth: revenue 67,535 / 62,753 - 1 = 7.6% (2025); 62,753 / 61,860 - 1 = 1.4% (2024); Q2 2026 17,162 / 16,977 - 1 = 1.1%; Software 25,011 / 23,629 - 1 = 5.8%, 27,085 / 25,011 - 1 = 8.3%, 29,962 / 27,085 - 1 = 10.6%; Software Q2 2026 7,761 / 7,387 - 1 = 5.1%; Consulting 20,884 / 20,058 - 1 = 4.1%, 20,692 / 20,884 - 1 = -0.9%, 21,055 / 20,692 - 1 = 1.8%, 21,055 / 20,058 - 1 = 5.0% over three years, Q2 2026 5,327 / 5,314 - 1 = 0.2%; Infrastructure 14,593 / 15,288 - 1 = -4.5%, 14,020 / 14,593 - 1 = -3.9%, 15,718 / 14,020 - 1 = 12.1%, Q2 2026 3,835 / 4,142 - 1 = -7.4%; Financing 737 / 713 - 1 = 3.4%, Q2 2026 186 / 166 - 1 = 12.0%; Transaction Processing 8,603 / 7,714 - 1 = 11.5% and 8,603 - 7,714 = 889 added 2023-2025; Hybrid Cloud 7,327 - 5,827 = 1,500 added 2023-2025; 11% to 13% of 7,327 = 806 to 952 a year; OpenShift 30% x 2.0bn = 0.6bn a year; Infrastructure Support 5,100 / 6,021 - 1 = -15.3% (2021-2025) and 4,800 / 5,100 - 1 = -5.9%; research and development 8,316 / 7,479 - 1 = 11.2%; Software segment profit 9,920 / 7,012 - 1 = 41.5%; Consulting segment profit 2,464 / 1,871 - 1 = 31.7%; financing receivables 15,193 / 11,738 - 1 = 29.4%; total debt 62.0bn - 50.9bn = 11.1bn since 2022. Shares: mainframe-linked revenue 10,618 + 8,603 + 5,100 = 24,321, and 24,321 / 67,535 = 36.0%; Hybrid Cloud 7,327 / 29,962 = 24.5% of Software; OpenShift 2.0 / 24.6 = 8.1% of software ARR; June 2026 ARR 24.6bn / 2025 Software revenue 29.962bn = 82.1%; revenue outside the United States 40,643 / 67,535 = 60.2%, so about 60%; research and development 8,316 / 67,535 = 12.3% of revenue; quantum more than 10bn / 5 years = more than 2bn a year, and 2.0 / 8.316 = 24%, about a quarter; goodwill 67,717 / 151,880 = 44.6% of total assets; goodwill plus intangibles (67,717 + 11,391) / 151,880 = 52.1%; other assets 151,880 - 67,717 - 11,391 = 72,772; HashiCorp goodwill 4,684 / 7,433 = 63.0%; Confluent goodwill 7,238 / 11,602 = 62.4%, other net assets 11,602 - 7,238 = 4,364; stock-based compensation 1,685 / 16,364 = 10.3% of segment profit; Kyndryl spin 55,179 / 73,620 - 1 = -25.0% of 2020 revenue, about a quarter. Margins: Software Q2 2025 2,296 / 7,387 = 31.1%; Consulting Q2 2025 562 / 5,314 = 10.6%; Infrastructure Q2 2026 835 / 3,835 = 21.8% and Q2 2025 965 / 4,142 = 23.3%; total segment profit Q2 2026 4,092 / 17,110 = 23.9% and Q2 2025 4,003 / 17,009 = 23.5%; Financing Q2 2026 108 / 186 = 58% (reported 58.0%); pre-tax margin 10,328 / 67,535 = 15.3%; Global Technology Services 2020 117 / 27,039 = 0.4%; gross margin Q2 2026 9,907 / 17,162 = 57.7% and Q2 2025 9,977 / 16,977 = 58.8%. Red Hat: 7,327 / 35,100 = 20.9% of consideration; pre-tax at the Software margin 0.331 x 7,327 = 2,425, and 2,425 / 35,100 = 6.9%, about 7%; after a 21% tax 6.9% x 0.79 = 5.5%; revenue needed for 8% after tax 0.08 x 35,100 / (0.331 x 0.79) = 10,738, about 10.7bn, which is 10,738 / 7,327 = 1.47 times 2025 revenue: about 3.2 years at 12.5% growth, 4.4 years at 9% and 7.8 years at 5%. Cash and capital: acquisitions plus dividends 2025 8,294 + 6,255 = 14,549, and 14,549 / 14,734 = 98.7% of free cash flow; first half 2026 acquisitions 10.5bn / free cash flow 4.8bn = 2.2 times; dividends 6,255 / 10,593 = 59.0% of net income; Consulting backlog 31.9bn / 21.055bn = 1.5 years of revenue; remaining performance obligations 71bn - 68bn = 3bn lower in six months; pension risk transfers 16 + 6 + 1.2 = 23.2bn; defined-benefit obligations 14,460 + 29,872 = 44,332 against plan assets 18,073 + 26,733 = 44,806; free cash flow guidance 14.7bn + 1.0bn = 15.7bn. Further: revenue per employee 67,535 / 264.3 thousand = about 255,500 dollars; Q2 2026 Software share of segment profit 2,502 / 4,092 = 61.1%; first-half Software 14,813 / 13,722 - 1 = 8.0%; amortisation of acquired intangibles 2,166 / 1,627 - 1 = 33.1%; free cash flow 14.7 / 6.5 = 2.3 times (2021-2025); Q2 2026 Transaction Processing 2,208 - 2,030 = 178 lower, Data 1,782 - 1,499 = 283 higher, Hybrid Cloud 1,998 - 1,796 = 202 higher, Transaction Processing above Hybrid Cloud by 2,030 - 1,998 = 32; share price 225.51 / 332.46 - 1 = -32.2% from the 52-week high; first half 2026 Hybrid Cloud 3,903 / 3,483 - 1 = 12.1%, Transaction Processing 3,963 / 4,037 - 1 = -1.8%, Hybrid Infrastructure 4,678 / 4,512 - 1 = 3.7%, Infrastructure Support 2,483 / 2,515 - 1 = -1.3%, Automation 3,692 / 3,467 - 1 = 6.5%, Data 3,256 / 2,736 - 1 = 19.0%, Financing 406 / 357 - 1 = 13.7%, Strategy and Technology 5,829 / 5,702 - 1 = 2.2%, Intelligent Operations 4,770 / 4,680 - 1 = 1.9%; Strategy and Technology Q2 2026 2,933 / 2,920 - 1 = 0.4%; Infrastructure Support 2021 share 6,021 / 14,188 = 42.4%; Infrastructure 2020 pre-tax margin 1,654 / 14,533 = 11.4%; Consulting 2020 pre-tax margin 1,034 / 16,257 = 6.4%; buybacks 2015-2019 4,609 + 3,502 + 4,340 + 4,443 + 1,361 = 18,255; Hybrid Cloud 7,327 / 67,535 = 10.8% of revenue, about a tenth; acquisitions 2023 to June 2026 5.1 + 3.3 + 8.3 + 10.5 = 27.2bn; HashiCorp net of acquired cash and securities 7,433 - 929 - 331 = 6,173; ARR 24.6 - 21.3 = 3.3bn from end-2024 to June 2026; net interest excluding Financing 1,312 / 984 - 1 = 33.3%; 2024 signings 25,103 / 20,692 = 1.21, about 21% above revenue; generative AI book 12.5 - 9.5 = 3.0bn added in Q4 2025; EMEA growth gap 14.2 - 9.0 = 5.2 points; revenue 57,350 / 73,620 - 1 = -22.1% from 2020 as filed to 2021. Trailing twelve months to June 2026: revenue 67,535 - 31,519 + 33,079 = 69,095; net income 10,593 - 3,249 + 3,381 = 10,725; P/E 212,460 / 10,725 = 19.8; P/S 212,460 / 69,095 = 3.07 - growth rates and line totals. — FY2015-Q2 2026 · publ. September 2026 · source ↗
    Method: Arithmetic on figures reported in IBM's Annual Reports, Forms 10-Q, results releases and market data; operands shown in the source line.
  12. ReportedThe nearest replacement is Consulting signings, which Krishna said were "led by strong GenAI contribution"; they rose 6.8% in the first half of 2026.
    Arvind Krishna's letter to IBM investors with preliminary second-quarter 2026 results, Form 8-K exhibit 99.1. — Q2 2026 · publ. 14 July 2026 · source ↗
  13. ReportedThe nearest replacement is Consulting signings, which Krishna said were "led by strong GenAI contribution"; they rose 6.8% in the first half of 2026.
    IBM Form 10-Q for the quarter ended 30 June 2026 - segment results, revenue categories, RPO, the Confluent acquisition and management discussion - Consulting segment results and signings. — Q2 2026 · publ. 23 July 2026 · source ↗
Sources
Generated September 28, 2026