IBM Reports Strong Q2 Results, Shares Surge 5%

IBM shares experienced a 5% increase in after-hours trading on Wednesday following the company's announcement of second-quarter results that exceeded analysts' expectations. The tech giant reported revenue of $15.77 billion, surpassing the anticipated $15.62 billion, and marking a 1.9% increase from $15.48 billion in the same quarter last year. Net income rose to $1.83 billion, or $1.96 per share, compared to $1.58 billion, or $1.72 per share, a year earlier. The company, which specializes in hardware, software, and consulting services, has raised its forecast for 2024 free cash flow to over $12 billion, a significant increase from the previous estimate of over $1 billion in April. CEO Arvind Krishna expressed confidence in the positive outlook for technology spending, although he acknowledged the ongoing challenges posed by higher interest rates and inflation. IBM's software division reported revenue of $6.74 billion, a 7% increase that surpassed the StreetAccount consensus of $6.49 billion. However, the consulting segment saw a slight decline, generating $5.18 billion, which fell short of the expected $5.23 billion. The infrastructure segment, which includes mainframe computers, posted $3.65 billion in revenue, exceeding the $3.51 billion consensus. Additionally, IBM announced a deal with Palo Alto Networks to sell its QRadar cloud software, facilitating customer migration to the Cortex Xsiam product. Despite the recent surge, IBM shares have risen 14% year-to-date, aligning with the performance of the S&P 500.