IBM reports better-than-expected earnings despite economic concerns

In the first quarter of 2025, IBM achieved results that exceeded expectations in terms of earnings and revenue, signaling a resilient performance despite a challenging economic context. The company reported an adjusted earnings per share of $1.60, surpassing the anticipated $1.40, and generated revenue of $14.54 billion, which also outperformed the expected $14.4 billion. However, there was a notable decline in net income, dropping to $1.06 billion from $1.61 billion in the same quarter of the previous year. This decline comes in the face of a cautious outlook regarding the company's consulting segment, which shrank by 2% compared to the prior year, alongside concerns over economic conditions that appear to be affecting clients' purchasing decisions. The management emphasized that while demand for their hybrid cloud and artificial intelligence services remains strong, uncertainties related to tariff policies and global economic conditions have made customers hesitant to commit to investments. Additionally, IBM reiterated its full-year guidance for 2025, maintaining expectations of $13.5 billion in free cash flow and at least 5% revenue growth at constant currency. This cautious optimism reflects the focus on adapting to the evolving market environment driven by inflation rates and geopolitical factors. The juxtaposition of strong year-over-year growth against a backdrop of wider economic concerns underscores a mixed outlook for the future of IBM’s stock, raising questions about its resilience as it navigates potential market downturns.