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RIYADH - IBM (NYSE: IBM), a prominent player in the IT Services industry with a market capitalization of $242.82 billion, has entered into a new agreement with Riyadh Air to implement watsonx, IBM’s suite of artificial intelligence (AI) products, and IBM Consulting AI solutions, aiming to establish an AI-driven enterprise to enhance the experiences of Riyadh Air’s guests and employees. This move is part of Riyadh Air’s preparation for its first flights scheduled for late 2025, as it aims to become the world’s first digital native airline. According to InvestingPro analysis, IBM currently trades above its Fair Value, reflecting strong investor confidence in its AI initiatives and strategic partnerships.
The partnership was announced at the FII PRIORITY Miami 2025 Summit, where leaders from both companies expressed their commitment to innovation in the aviation sector. Riyadh Air, backed by the Public Investment Fund and launched in March 2023, is gearing up to become a digitally-led, full-service airline that adheres to global sustainability and safety practices.
Adam Boukadida, Riyadh Air’s Chief Financial Officer, highlighted the airline’s ambition to offer a seamless travel experience by leveraging AI to anticipate passenger needs and optimize flight operations. IBM’s watsonx will form the core of Riyadh Air’s AI platform, focusing on data security, privacy, and responsible AI adoption. The airline also plans to use Agentic AI to deploy autonomous bots for personalized system interactions.
IBM will oversee the installation and deployment of watsonx, utilizing IBM Garage methodology to develop AI use cases aimed at automating and digitally transforming operations. Additionally, Riyadh Air will benefit from IBM Consulting Advantage, an AI-powered delivery platform, to enhance efficiency and customer service, including the deployment of AI-powered Virtual Assistants.
Mohamad Ali, Senior Vice President and Head of IBM Consulting, emphasized the transformative potential of embedding watsonx into Riyadh Air’s operations, as the airline adopts an AI-first approach to redefine industry standards.
The collaboration with IBM is in line with Saudi Arabia’s Vision 2030, which seeks to accommodate 330 million passengers annually by 2030 and establish the Kingdom (TADAWUL:4280) as a global aviation hub. By integrating AI throughout its ecosystem, Riyadh Air aims to set a new benchmark in the industry and provide a comprehensive, intelligent, and personalized travel experience. IBM brings substantial financial strength to this partnership, with annual revenue of $62.75 billion and a strong Financial Health Score rated as GOOD by InvestingPro, which offers 12 additional exclusive insights about IBM’s market position and growth potential through its comprehensive Pro Research Report.
This strategic initiative is expected to position Riyadh Air at the forefront of digital innovation in aviation, supporting the airline’s goal to connect guests to over 100 destinations worldwide by 2030. This news is based on a press release statement.
In other recent news, International Business Machines Corporation (NYSE:IBM) reported its fourth-quarter 2024 earnings, surpassing earnings per share (EPS) expectations with $3.92 compared to the forecast of $3.80, though revenue slightly missed projections at $17.6 billion against the anticipated $17.62 billion. Despite achieving a record free cash flow of $12.7 billion for the year, the company saw its stock dip by 1.08% in after-hours trading. In a strategic move, IBM has entered into underwriting agreements for the issuance of new debt securities, including both Euro and USD denominated notes, as part of its broader financial strategy to manage its capital structure. The Euro-denominated notes, totaling €3.5 billion, are set to be listed on the New York Stock Exchange, with the first interest payment due in 2026.
Analyst firms have recently weighed in on IBM’s stock, with Stifel raising its price target to $290 while maintaining a Buy rating, citing confidence in IBM’s mid-single-digit revenue growth and free cash flow projections. Conversely, Morgan Stanley (NYSE:MS) reiterated its Equalweight rating, maintaining a price target of $228, noting that IBM’s current valuation is near all-time highs. IBM’s management has projected a mid-single-digit revenue growth rate and a high-single-digit free cash flow growth through 2027, aligning with Morgan Stanley’s estimates. The company continues to focus on strategic investments in its software and AI capabilities, with a strong emphasis on its Red Hat and consulting segments, which are expected to drive future growth.
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