IBM’s Watson Fuels Strong Q3 Earnings, Promising Greater Future Profits

International Business Machines (IBM) has seen promising results in its third quarter, fuelled strongly by Watson, IBM’s flagship cloud-based big data analytics platform. As highlighted in IBM’s Q3 earnings report, they were able to surpass Wall Street expectations, boasting $2.9 billion earnings at $2.98 per share on $19.2 billion revenue. This compared favorably against anticipated non-GAAP earnings of $3.23 per share and revenue of $19 billion.

Ginni Rometty, IBM’s chairman, president, and chief executive officer, openly praised the performance, attributing the promise showcased during the third quarter to the “double-digit growth” in the company’s strategic imperatives. IBM’s ability to harness massive amounts of data through its technology, particularly Watson and the IBM Cloud, is creating new markets and transforming industries. The potential held by these ventures is starting to reveal itself in the company’s financial performance.

This success is not effectively reported separately for Watson. However, estimates from UBS’s securities research division predict that Watson may contribute to $500 million in revenue for this year alone. The projections get even more exciting as it is predicted that this figure could move to nearly $6 billion by 2020 and soar to almost $17 billion by 2022.

At present, IBM’s cloud as a service has a revenue run rate of $7.5 billion. Revenue from Watson, analytics, and the Internet of Things combine to total $8 billion. Other significant figures from the Q3 report include a revenue of $4.2 billion from Global Business Service, despite a 2% decrease, and a 3% rise in software revenue, standing at $5.7 billion.

[image of IBM Watson – source: Investopedia]

With a wider understanding of what Watson can offer, its popularity has seen an upswing as its applications grow. Whether it’s the detection and treatment of cancer or aiding in education, Watson is carving out its place in the big data analytics space. Given its trajectory, it appears set to become one of IBM’s major sources of revenue as we progress into the next decade.

Following a breakdown of the Q3 figures, IBM’s prospects are looking up as they build on the foundational success of Watson and other strategic imperatives this year. Fundamental to this success is the company’s ability to leverage deep expertise and breakthrough technology. This innovative combination generates growth and indicates a truly promising future for IBM and Watson.

This article was updated in 2025 to reflect modern realities.
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