IBM Stock Soars 8% In Premarket After Beating Q4 Estimates, Unveiling AI Strategy

International Business Machines Corp. IBM saw its shares surge over 8% in premarket trading Thursday following the release of its fourth-quarter earnings, which surpassed analysts’ expectations. The tech giant also unveiled its ambitious artificial intelligence strategy, further boosting investor confidence.

What Happened: IBM reported earnings per share of $3.92, exceeding the anticipated $3.75. Revenue also edged past forecasts, reaching $17.55 billion compared to the projected $17.54 billion. This represents a slight increase from the $17.38 billion reported during the same period last year.

The fourth-quarter results painted a mixed picture across IBM’s various segments. The software segment demonstrated robust growth, with revenue up 10%. However, the Consulting segment experienced a 2% decline, while Infrastructure proved to be the weakest performer, with revenue down 8%.

See Also: IBM Beats Q4 Estimates, Bets Big On AI With $2 Billion Generative AI Business

A key highlight of the earnings report was IBM’s unveiling of its comprehensive AI strategy. The company has integrated AI across its entire portfolio, from tools designed to help clients manage hybrid cloud environments and infrastructure, to consulting services and platform products.

“Our book of business related to generative AI now stands at greater than $2 billion inception-to-date. The mix is roughly one-quarter software and three-quarters consulting signings,” CEO and Chairman Arvind Krishna stated during the earnings call.

See Also: Western Digital Reports Mixed Q2 Ahead Of Business Split: AI Demand Bolsters Outlook

Why It Matters: Looking ahead, Krishna expressed optimism about the company’s prospects. “With our focused strategy, enhanced portfolio, and culture of innovation, we're well-positioned for 2025 and beyond and expect revenue growth of at least five percent and free cash flow of about $13.5 billion this year,” he said.

Price Action: The positive earnings report and AI strategy announcement sent IBM shares soaring 8.03% to $247 per share in premarket trading, significantly outperforming the 0.40% gain in the SPDR S&P 500 ETF Trust SPY.

Despite the positive market reaction, analysts remain somewhat cautious. According to 22 analysts tracked by Benzinga, IBM has a consensus price target of $200.19 per share with a ‘hold' rating. Individual price targets range from a high of $260 to a low of $139. The average price target of $233.33 from Morgan Stanley, RBC Capital, and JPMorgan suggests a potential downside of 5.53%.

Read Next:

• T-Mobile Underscores SpaceX’s Starlink’s Role In California Wildfire Relief, Closes Record-Breaking Growth Year

Photo courtesy: Shutterstock