IBM shares jumped 12% to $255.50 after the company reported strong revenue growth and an increase in AI-related bookings. The Armonk, New York-based tech giant expects $13.5 billion in free cash flow for the fiscal year ending in December 2025, surpassing Wall Street estimates.
For the quarter ending in December, IBM’s software unit saw a 10% expansion to $7.92 billion, driven by growth in Red Hat, a business acquired by IBM in 2019. The company also reported an increase of 16% in revenue from its consulting unit to $5.18 billion, despite a decline in traditional consulting projects.
AI-related bookings have exceeded $5 billion since mid-2023 and account for about 80% of the total. Chief Executive Officer Arvind Krishna praised the team’s work on meeting company commitments, saying “three years ago we laid out a vision for a faster-growing, more-profitable IBM.”
The shares’ surge comes as investors await further details from an upcoming analyst event where IBM is expected to share its expectations for results over the next few years. Analysts had estimated $17.5 billion in sales, and the company’s adjusted profit per share was ahead of estimates at $3.92.
A recent reduction in government spending has also been a concern for tech companies, with 3-4% of IBM’s revenue tied to federal government contracts. However, Chief Financial Officer Jim Kavanaugh sees this as an “opportunity” for the company.
Source: https://finance.yahoo.com/news/ibm-reports-strong-sales-growth-211037765.html