Home News IBM Reports Strong Q3 Earnings, Driven by AI Adoption

IBM Reports Strong Q3 Earnings, Driven by AI Adoption

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IBM Corp.’s stock experienced a 2% surge in after-hours trading on Wednesday following an impressive beat in profits and the company’s announcement of increased adoption of its artificial intelligence offerings.

In the third quarter, IBM recorded a net income of $1.7 billion, or $1.84 per share, representing a significant improvement compared to the net loss of $3.2 billion, or $3.54 per share, during the same period last year. Adjusted earnings from continuing operations came in at $2.20 per share, surpassing the FactSet consensus of $2.12 per share.

The company’s revenue also demonstrated growth, reaching $14.8 billion, up from $14.1 billion, surpassing analysts’ expectations of $14.7 billion. Notably, software revenue experienced an 8% increase, consulting revenue grew by 6%, while infrastructure revenue declined by 2%.

According to IBM’s Chief Executive Arvind Krishna, the company’s Watson AI and data platform, combined with its hybrid cloud solutions, is gaining traction among clients, driving the growth of its software and consulting businesses. As a result, IBM remains confident in its revenue and free cash flow growth projections for the full year.

Within its software business, IBM witnessed a 9% growth in Red Hat revenue. Additionally, the company reported a 6% increase in revenue from data and AI within this segment.

Looking ahead, IBM still expects a constant-currency basis revenue growth of 3% to 5% for the full year. Furthermore, the company is aiming for approximately $10.5 billion in free cash flow, aligning with its previous forecast. During Q3, IBM generated $1.7 billion in free cash flow.

In conclusion, IBM’s strong third-quarter results validate the growing adoption of its AI offerings and solidify its position as a leader in the market. With its focus on innovative solutions, the company is well-positioned for continued success in the future.

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