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GM Shifts Focus to Super Cruise After Robotaxi Setback

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General Motors (GM) is shifting its technology strategy toward its Super Cruise driver assistance system after discontinuing its costly robotaxi venture, Cruise. The company expects Super Cruise, a partially automated driving system similar to Tesla’s Autopilot, to generate approximately $2 billion in annual revenue within five years.

Super Cruise, available on select Cadillac and large SUV models, enhances driver convenience while ensuring attentiveness through a robust sensing system. Unlike Tesla’s Autopilot, Super Cruise actively monitors driver engagement, offering a more structured approach to hands-free driving. Customers can access the technology as a standard or optional feature, with optional pricing between $2,200 and $2,500. After a free three-year trial, users can continue with a subscription at $25 per month or $250 annually.

Despite GM’s push into software-driven vehicle technologies, its stock remains undervalued compared to Tesla. Tesla’s valuation is around 120 times expected earnings, reflecting its tech-driven appeal, while GM trades at just five times earnings. Investors also remain cautious about potential tariffs under the Trump administration, which contributed to an 8.9% drop in GM shares following its earnings report.

However, GM CEO Mary Barra remains optimistic about Super Cruise’s growth. The automaker expects to double its fleet of 360,000 Super Cruise-enabled vehicles in 2025. Currently, about 20% of users subscribe after their trial period ends, and GM aims to increase its subscription revenue as more vehicles reach their renewal window.

While Super Cruise involves hardware costs such as cameras and radar, analysts believe its software component will be highly profitable. Recurring subscription revenue could boost customer retention and brand loyalty, strengthening GM’s long-term position in the driver-assistance market.

 

IBM Surpasses Profit Estimates in Q4 as AI and Software Drive Growth

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IBM (IBM.N) exceeded fourth-quarter profit forecasts on Wednesday, bolstered by strong demand in its software division as businesses increased IT spending. This growth, driven by a shift toward cloud infrastructure and the adoption of generative artificial intelligence technology, sent IBM’s shares soaring by approximately 10% in after-hours trading.

The company’s software segment saw its largest revenue increase in five years, benefiting from the heightened focus on AI-driven cloud solutions. Analyst Matt Swanson of RBC Capital Markets noted that increased software growth is associated with higher profit margins.

IBM also raised its outlook for fiscal 2025, forecasting revenue growth of at least 5% at constant currency, compared to 3% growth in 2024. This projection indicates confidence in IBM’s AI and cloud strategy, according to Michael Schulman, chief investment officer at Running Point Capital.

IBM’s “AI Book of Business” — a combination of bookings and actual sales across various AI products — reached over $5 billion, a $2 billion increase from the third quarter. The company made its “Granite” AI models open-source in May, positioning itself differently from competitors like Microsoft (MSFT.O), which charge for access to their AI models. This approach mirrors the strategy of DeepSeek, a Chinese startup that launched a free AI assistant, raising concerns over U.S. tech dominance.

Despite this, IBM’s Chief Financial Officer, James Kavanaugh, did not provide details on whether IBM intends to offer DeepSeek’s models on its Watsonx platform, which helps users deploy chatbots and other AI tools.

On the downside, IBM’s consulting division, which dominates its AI business, experienced a 2% decline in revenue, totaling $5.2 billion for the quarter. The focus on long-term AI integration consulting projects has yet to reflect in revenue figures. Overall, IBM’s total revenue remained flat at $17.55 billion for the quarter, aligning with analyst expectations. The company reported adjusted per-share earnings of $3.92, surpassing the forecast of $3.75.

 

HCLTech Misses Q3 Revenue Estimate, Tightens Full-Year Forecast

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India’s third-largest software company, HCLTech, reported a smaller-than-expected revenue for the December quarter and revised its full-year growth forecast downwards. Despite an increase in demand anticipated for fiscal 2025, underperformance in its software business led to the company narrowing its revenue growth prediction.

Revenue and Forecast Adjustments

HCLTech’s consolidated revenue for Q3 rose by 5.1%, reaching 298.9 billion rupees ($3.45 billion), but this fell short of analysts’ expectations, which were pegged at 300.68 billion rupees. As a result, the company tightened its full-year revenue growth forecast for fiscal 2025 to 4.5%-5%, down from a previous range of 3.5%-5%. The revision reflects the completion of an acquisition of certain intellectual property (IP) assets from U.S.-based HP Enterprise last month.

Challenges in Software Business

The company’s software vertical, which constitutes 11% of total revenue, underperformed expectations. However, CEO C Vijayakumar noted an improvement in the demand environment, especially in discretionary spending, which is expected to pick up in 2025. He emphasized that clients are looking to increase their IT investments in the coming year, providing some optimism for future growth.

Profit and Deal Wins

Despite the revenue miss, HCLTech reported a 5.5% increase in net profit, which reached 45.91 billion rupees, slightly above analysts’ expectations of 45.82 billion rupees. The company also secured new deal wins worth $2.1 billion in Q3, a solid result despite a slight decline from the previous quarter ($2.22 billion) and a year-over-year increase from $1.93 billion.

Industry Outlook and Comparison

HCLTech is not alone in facing challenges in India’s tech industry, which has been experiencing slower growth due to inflationary pressures and macroeconomic uncertainty. Analysts expect U.S. President-elect Trump’s pro-business policies to benefit Indian IT firms, as the North American market accounts for a significant portion of the sector’s revenue.

Shares of market leader Tata Consultancy Services (TCS) surged 5.6% last Friday after signaling a possible demand revival, even though it missed Q3 estimates. HCLTech’s stock closed 0.3% lower ahead of its earnings report. Other major Indian IT companies, including Wipro and Infosys, are expected to release their quarterly results later this week.