IBM shares rise quickly as AI-boosted financials beat expectations

International Business Machines Corp (NYSE:IBM) shares turned higher in ‘afterhours’ dealing, after its second-quarter financials beat Wall Street expectations.

The IT firm reported $15.77 billion of revenue, ahead of consensus analyst' forecasts of $15.62 billion.

At $2.43 per share, earnings per share was comfortably above the market’s forecast of $2.18.

IBM said it generated $1.83 billion of net income for the quarter, equating to $1.96 per share.

Given the AI-boom perhaps its unsurprising that IBM’s software division performed well with the unit’s revenue contribution coming in at $6.74 billion, which was a 7% improvement year-over-year.

IBM highlighted strong demand for its AI-related services – which includes AI / machine learning OG ‘Watson’ as well as as its newer ‘Watsonx’ and the ‘Granite’ family of AI models.

Growth in IBM’s AI business is sharp at $2 billion having doubled, adding $1 billion in the second quarter alone.

"We had a strong second quarter, exceeding our expectations, driven by growth in both revenue and free cash flow.

“We continue to see that clients turn to IBM for our technology and our expertise in enterprise AI, and our book of business for generative AI has grown to more than two billion dollars since the launch of watsonx one year ago."

IBM, meanwhile, upgraded its forecast for full-year free cash flow which it now predicted to exceed $12 billion.

In ‘afterhours’ trading, IBM shares were up $4.26 or 2.3% priced at $188.28 each – after seeing nearly $193 per share with a reflex move as the results were released.