IBM's Q4 Earnings Surge Driven by AI and Open-Source Strategy

IBM shares surge 10% on earnings beat

Chairman, President and Chief Executive Officer of IBM Arvind Krishna attends the 55th annual World Economic Forum (WEF) meeting in Davos, Switzerland, Jan. 22, 2025. IBM reported fourth-quarter earnings on Wednesday that topped Wall Street expectations for earnings and revenue. The shares rose 10% in extended trading. It's the largest rise in IBM's stock price since March 2020. Here's how the company did versus LSEG consensus expectations: IBM reported $2.92 billion in net income, or $3.09 per diluted share, versus $3.29 billion, or $3.55 per share, in the year-ago period. IBM's overall revenue rose 1% during the quarter. For the entire year, IBM's revenue rose 1% to $62.8 billion, with software growing 8%, while infrastructure revenue declined 4%. IBM said that its software segment grew 10% year-over-year to $7.9 billion, partially thanks to demand for artificial intelligence technology and strong performance from its Red Hat Linux operating system. Revenue in IBM's consulting division dropped 2% to $5.2 billion in the quarter. In a statement, IBM CEO Arvind Krishna said the company has recorded $5 billion in bookings for its generative AI business, which includes sales and future sales in the company's software and consulting division. "We closed the year with double-digit revenue growth in Software for the quarter, led by further acceleration in Red Hat," " Krishna said in a statement. "Clients globally continue to turn to IBM to transform with AI."

IBM Stock Jumps on Better-Than-Estimated Results, Open-Source AI Strategy

IBM (IBM) shares are jumping nearly 8% in premarket trading Thursday, a day after the company posted fourth-quarter results that topped analysts' estimates as its artificial intelligence (AI)-enabled business surged. IBM reported adjusted earnings per share (EPS) of $3.92, above the consensus estimate of $3.79 of analysts polled by Visible Alpha. Revenue of $17.55 billion was a tick higher than expectation. "Our generative AI book of business now stands at more than $5 billion inception-to-date, up nearly $2 billion quarter over quarter," IBM CEO Arvind Krishna said. According to a transcript of the earnings call provided by AlphaSense, Krishna added that IBM's AI products "provide clients with a consistent and scalable AI foundation built on open source technology." Earlier this week, Chinese startup DeepSeek shook markets with its release of an AI model at a fraction of the cost of rivals like OpenAI that is open source -- which means it is readily accessible and can be modified or enhanced by anyone. IBM shares have gained almost 22% in the past year through Wednesday.