IBM reported better-than-expected Q4 results, boosted by AI software sales.
- IBM stock jumped in the after-market session on Wednesday, similar to the rally after its Q3 report in October.
- Software revenue increased by 12% YoY, and the AI business book increased by 32% QoQ.
- IBM expects over 5% revenue growth in 2026.
International Business Machines Corp. shares jumped 7.7% in after-hours trading on Wednesday, ranking among the top gainers, after the software and consulting giant posted fourth-quarter results and 2026 forecast that topped expectations.
Not among the names typically associated with the AI boom, IBM said its results were boosted by software sales, with handsome growth for its AI-focused offerings.
Revenue rose 12% to $19.7 billion, and adjusted earnings increased 15% to $4.52 per share – both beating Wall Street’s estimates of $19.23 billion revenue and $4.32 EPS.
Revenue from IBM’s software unit, which includes cloud, Red Hat offerings, AI software such as WatsonX, and automation and data products, rose 14% to $9 billion.
“Our generative AI book of business now stands at more than $12.5 billion. This capped a strong 2025 for IBM where we exceeded expectations for revenue, profit and free cash flow,” CEO Arvind Krishna said in a statement. AI customers are shifting from experimenting to scaling, he said on the analyst call.
The company’s AI business book was $9.5 billion as of the end of the third quarter. IBM expects 2026 revenue to increase by more than 5%, slightly higher than analysts’ 4.6% growth estimate.
On Stocktwits, retail sentiment for IBM flipped to ‘bullish’ from ‘bearish’ the previous day, amid ‘extremely high’ message volume.
“$IBM boo yah!!! My $350 by EOY is definitely in play. May come quicker than expected. However, been in this for 18 months on what I expect will a multi-year run similar to MSFT run,” a user posted.
If the after-hours gains hold up on Thursday, it would be the stock’s best performance since last October, when it gained nearly 8% following IBM’s third quarter report.
Since then, the stock has traded within a narrow range. As of the last close, IBM was down 0.7% so far this year.
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