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IBM Shares Surge 9% Following Strong Fourth-Quarter Earnings Report

Prime Highlights: 

IBM reported stronger-than-expected fourth-quarter earnings, with adjusted earnings per share of $3.92, beating the $3.75 forecast. 

Revenue for the quarter was $17.55 billion, slightly surpassing the expected $17.54 billion. 

Net income declined to $2.92 billion, or $3.09 per share, compared to $3.29 billion, or $3.55 per share, in the same quarter last year. 

Key Background: 

IBM reported robust fourth-quarter earnings on January 29, surpassing Wall Street expectations for both earnings and revenue. As a result, the company’s shares surged by as much as 10% in after-hours trading before stabilizing at a 9% increase. 

The tech giant posted adjusted earnings of $3.92 per share, exceeding analysts’ forecast of $3.75. Revenue for the quarter came in at $17.55 billion, slightly above the expected $17.54 billion. Despite a decline in net income to $2.92 billion from $3.29 billion in the previous year, IBM’s earnings per diluted share were reported at $3.09 compared to $3.55 in the year-ago period. 

For the full year, IBM’s total revenue grew by 1% to reach $62.8 billion. Software revenue, in particular, saw an 8% increase, while infrastructure revenue declined by 4%. IBM’s software segment performed notably well, growing by 10% year over year, driven by strong demand for artificial intelligence technologies and solid contributions from its Red Hat Linux operating system. IBM’s consulting division, however, experienced a 2% drop in revenue for the quarter, amounting to $5.2 billion. 

Looking ahead, IBM CEO Arvind Krishna projected a full-year growth of approximately 5% in 2025, adjusted for currency fluctuations, with expectations for $13.5 billion in free cash flow. Krishna also highlighted the company’s progress in its generative AI business, with IBM recording $5 billion in bookings, including sales and future sales from both its software and consulting divisions. He emphasized the company’s role in helping clients worldwide transform through AI technology. This earnings performance reflects IBM’s ongoing investment in AI and software, positioning the company for continued growth in the coming year.