IBM Common Stock (NYSE:IBM) stock fell 8.07% (As on July 24, 11:29:43 AM UTC-4, Source: Google Finance) after the company beat expectations on second-quarter earnings and revenue, aided by strong sales of new mainframe hardware that’s capable of processing vast amounts of data, making it useful for artificial intelligence workloads. Net income, which includes costs related to acquisitions, rose to $2.19 billion, or $2.31 per share, from $1.83 billion, or $1.96 per share, a year ago. Software revenue climbed about 10% to $7.39 billion, falling short of the $7.43 billion consensus among analysts surveyed by StreetAccount. Hybrid cloud revenue, including Red Hat, showed 16% growth. The software unit’s gross margin of 83.9% was barely narrower than StreetAccount’s 84.0% consensus. Revenue from consulting rose almost 3% to $5.31 billion, higher than StreetAccount’s $5.16 billion consensus. Infrastructure revenue went up 14% to $4.14 billion, above the $3.75 billion StreetAccount average estimate. During the quarter, IBM announced the next-generation z17 mainframe computer and the acquisition of data and artificial intelligence consulting firm Hakkoda.
Moreover, the company said geopolitical tensions continue to keep some of its customers from moving cautiously, though he said that was not a major factor overall. IBM said its generative AI book of business, which combines bookings with actual sales across various AI products and services, rose to $7.5 billion in the quarter, up from $6 billion in April. The company has made a big effort to attract AI developers. One of its most recent announcements is a new service called watsonx Orchestrate, which it says enables businesses to build autonomous AI agents that can perform tasks without human supervision in less than five minutes
IBM in the second quarter of FY25 has reported the adjusted earnings per share of $2.80, beating the analysts’ estimates for the adjusted earnings per share of $2.64, according to LSEG consensus. The company had reported the adjusted revenue growth of 8 percent to $16.98 billion in the second quarter of FY25, beating the analysts’ estimates for revenue of $16.59 billion.
The company broke with tradition in April and offered investors a one-off outlook on revenue, due to the uncertainty around U.S. President Donald Trump’s tariffs policy at the time. However, the company reiterated it’s still looking for more than $13.5 billion in free cash flow in fiscal 2025, as it said three months earlier. For the full year, it’s looking for revenue growth of around 5% at constant currency rates.