Welcome to Seeking Alpha's Wall Street Breakfast, where we cover the top news for investors

every morning. Good morning. Today is Thursday, April 24th, and I'm your host, Kim Kahn, filling in for

Julie Morgan. IBM is selling off as worries about its consulting business and the negative

impact of Doge overshadowed

better than expected Q1 results and guidance. Software revenue for the first quarter increased

7% year over year to 6.336 billion, but consulting declined 2% to 5.068 billion.

SA analyst Odom Day said the report demonstrated continued strength in its software business

while consulting continued to drag.

Red Hat continued to pull the software business ahead with its low teens' growth, he said.

Overall, IBM's earnings Q1 was impressive, but management made no changes to its mid-single-digit

growth model for the year.

The lack of any revisions to its growth model,

along with the pressure in its consulting business, might keep the stock range-bound for now.

On the earnings call, CEO Arvin-Krishna said in the near term, uncertainty may cost clients to pause

and take a wait-and-see approach. For clients with a more direct impact from current policy,

the slowdown may be more pronounced. Consulting is also more susceptible to discretionary

pullbacks and Doge-related initiatives. CFO James Kavanaugh added, while we feel good about

the core growth drivers of our business, there are areas of our portfolio that could see greater

variability in the

event that the macroeconomic environment deteriorates.

This includes consulting, which, as said, is more sensitive to discretionary pullbacks and

Doge-related initiatives, consumption-based services and software, including Red Hat, and areas

...