Cognitive Solutions

IBM’s (IBM) Cognitive Solutions segment, which comprises ~23% of its total revenue, is expected to deliver another excellent quarter, driven by strong demand for its Watson AI platform and blockchain offerings. As shown in the graph below, IBM’s Cognitive Solutions revenue has grown at a compound annual rate of 1.4% over the last five quarters.

Can IBM’s Cognitive Solutions Deliver in Fiscal Q2 2018?

In fiscal Q1 2018, the segment’s revenue grew 5.9% YoY (year-over-year) to $4.3 billion, buoyed by IBM’s on-premises analytic platform and new software-as-a-service offerings. Meanwhile, the segment’s transaction-processing offerings and solutions software saw revenue growth of 5.4% and 3.1%, respectively.

Key drivers

IBM’s Cognitive Solutions segment is expected to benefit from higher adoption of the Watson AI platform in the health and financial industries in fiscal Q2 2018. Thanks to GDPR (General Data Protection Regulation) implementation, the company’s security products, QRadar and Resilient, may further support the segment.

IBM’s blockchain platform, commercially launched in fiscal Q3 2017, is growing strongly. IBM now has over 50 active blockchain networks used by several major names, including Walmart (WMT), Unilever (UL), and Kroger (KR).

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