Shares Jump On Better-Than-Expected Earnings, AI Push
IBM stock jumped late Wednesday after the tech giant reported better-than-expected fourth quarter results and touted the progress of its artificial intelligence products.
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In a news release, IBM (IBM) said it earned an adjusted $3.87 per share on $17.4 billion in fourth-quarter sales. On average, analysts polled by FactSet expected the Armonk, N.Y.-based company to earn $3.79 per share on $17.3 billion in sales for the December-ending quarter.
“Client demand for AI is accelerating and our book of business for Watsonx and generative AI roughly doubled from the third to the fourth quarter,” said Arvind Krishna, IBM chairman and chief executive, in the news release.
During the year-earlier period, IBM earned an adjusted $3.60 per share and the company reported $16.7 billion in sales.
In recent after-hours trading on the stock market today, IBM stock rose nearly 5% to 182.34.
Forecast For 2024
For the fourth quarter, IBM’s software revenues bumped up 3% from the same period last year, while consulting revenues increased 5.8% and infrastructure sales increased 2.7%.
IBM also provided its forecast for 2024. Krishna said the company expects revenue to grow in the mid-single digits while generating $12 billion in free cash flow.
For all of 2023, IBM collected $61.9 billion in revenue, up 2% from 2022.
Further, IBM said in the news release that the company exceeded its 2023 objective of generating $10.5 billion in free cash flow, reaching $11.2 billion.
IBM Stock: Technical Analysis
Coming into earnings, IBM had gained just over 7% in the first month of the year. Last year, IBM stock gained 16% compared to a 24% gain for the S&P 500 index.
But shares rallied late last year, as excitement grew about IBM’s potential to win artificial intelligence business. IBM shares are up more than 20% since the company reported third-quarter earnings ahead of analyst expectations on Oct. 26.
That performance is reflected in IBM’s technical scores. The company’s stock has a strong IBD Composite Rating of 92 out of a best-possible 99, according to IBD Stock Checkup. Moreover, its Relative Strength Rating checks in at 88 out of a best-possible 99, indicating IBM stock has outperformed 87% of the market over the past 12 months.
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