IBM stock price today jumps over 7% after IBM earnings beat estimates – AI software growth and big acquisitions spark investor frenzy

IBM stock price today: IBM shares rose more than 7% in after-hours trading on Wednesday after the company reported fourth-quarter earnings that exceeded Wall Street expectations, driven by rising demand for its software services amid the rapid adoption of artificial intelligence.

IBM Stock Rises After Strong Q4 Earnings Beat Expectations

The company posted revenue of $19.69 billion for the quarter, beating analysts’ estimates of $19.23 billion, and adjusted earnings came in at $4.52 per share, ahead of the anticipated $4.32 per share, as per a report.

IBM Stock Price Up Today: AI Drives IBM Software Segment Growth

AI continues to be a major growth driver for IBM. Revenue from the software segment reached $9.03 billion, surpassing expectations of $8.77 billion, as per a Reuters report. Within software, the Automation unit grew 18%, while the Data unit surged 22% in the quarter.


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Strategic Acquisitions Strengthen IBM’s Software Portfolio

IBM has been actively expanding its software capabilities through acquisitions, including the $6.4 billion purchase of HashiCorp and its ongoing $11 billion acquisition of Confluent. CFO Jim Kavanaugh noted that the Confluent deal is expected to contribute around $600 million in dilution in 2026, mainly from stock-based compensation and interest expenses, as per the Reuters report.

IBM Earnings: Hybrid Cloud Growth Slows Due to Federal Shutdown

IBM’s high-margin hybrid cloud business, Red Hat, saw its growth slow to 10% in Q4, down from 14% in Q3 and 16% in Q2. Kavanaugh attributed the deceleration in part to the longest US government shutdown in history last quarter, noting that federal clients make up about 15% of Red Hat’s bookings, as per the Reuters report.

Also read: Meta stock today surges over 9% after Meta earnings beat estimates and AI spending outlook boosts investor confidence

Federal Funding Risks Could Affect Red Hat Bookings

He pointed out that while the federal government faces the risk of another partial shutdown this week, the company hopes any disruption will be short-term. Kavanaugh said, "We're going to have to deal with that as we move forward. Hopefully that is a short-term disruption," adding, "If the government approves the budget resolution and gets back to business and doesn't go on a shutdown, we'll have to wait and see how that plays out," as quoted by Reuters.

IBM AI Book of Business Expands to $12.5 Billion

The company’s AI-driven services continue to expand rapidly. IBM’s “AI book of business” grew $3 billion from the previous quarter, reaching $12.5 billion. Kavanaugh said the company will stop reporting this metric separately starting in the first quarter of 2026.

FAQs

Why did IBM stock rise today?

IBM beat revenue and earnings estimates, driven by strong AI and software demand.



How much revenue did IBM report?

IBM reported $19.69 billion in revenue, above analysts’ $19.23 billion estimate