Chicago (Business Emerge), July 25: IBM has surpassed analysts’ revenue projections for the second quarter and revised its annual growth forecast upward for its software segment, driven by increased client investments in AI technology. The tech giant has expanded its Watsonx platform, which enables users to implement chatbots and enhance code for AI applications. Additionally, IBM has made its Granite AI models open-source to further promote its AI services.
IBM’s shares saw a rise of approximately 3% in after-hours trading, contributing to their year-to-date increase of around 12%, reflecting the broader trend of rising AI-linked stocks.
The software division saw a revenue increase of roughly 7%, reaching $6.74 billion for the quarter. The company now projects high-single-digit growth for this segment in 2024, up from its previous forecast of mid-single-digit growth.
The AI Book of Business, encompassing both bookings and actual sales across various AI products, climbed to $2 billion, with about $1 billion added in the second quarter alone. Tejas Dessai, a research analyst at Global X, noted, “The rapid commercialization of Generative AI is accelerating, positioning diverse technology firms like IBM to benefit from the increasing demand for AI integration.”
Conversely, IBM has adjusted its annual consulting revenue expectations downward, now anticipating low-single-digit growth, compared to the earlier forecast of 6%-8% growth. Consulting revenue decreased by approximately 1% to $5.18 billion in the second quarter, as clients reduced spending on discretionary and short-term consulting projects amid persistent high interest rates and inflation.
James Kavanaugh, IBM’s Chief Financial Officer, remarked, “In the current dynamic macroeconomic climate, clients are focusing on technology to gain a competitive edge, with significant investment in Generative AI.”