IBM stock popped on Thursday amid fourth-quarter earnings and revenue that topped Wall Street estimates while 2025 free cash flow guidance came in above expectations. Including the pending Hashicorp acquisition, revenue guidance was just above views.
Reported after the market close on Wednesday, IBM earnings for the December quarter were $3.93 on an adjusted basis. Revenue rose 1% to $17.6 billion.
Analysts had projected EPS of $3.78 on revenue of $17.6 billion.
IBM Stock: Software, AI Bookings, Bright Spots
The Armonk, N.Y.-based firm's software business, including Red Hat, was a bright spot while the consulting business struggled again. The software business climbed 10% while consulting fell 2%. Infrastructure revenue fell 8%.
"IBM delivered a strong quarter highlighted by better solid overall software revenue at $7.9 billion vs. consensus of $7.9 billion but also a continued acceleration of Red Hat growth," said RBC Capital analyst Matthew Swanson in a report.
At Jefferies, analyst Brent Thill said in a report: "Software led the way with revenue accelerating for the 4th straight quarter to 11% growth. IBM's generative AI book of business accelerated, up 67% quarter-over-quarter to $5 billion."
On the stock market today, IBM stock popped nearly 13% to close at 258.27.
For 2025, IBM forecast revenue of growth of 5% and free cash flow of $13.5 billion. Analysts had estimated 2025 revenue growth of 4% and FCF of $13 billion.
The Hashicorp acquisition is expected to close by the end of March. "We estimate HashiCorp adds about one point to total revenue growth for the year," said BMO Capital Markets analyst Keith Bachman in a report.
Further, IBM hosts an investor day on Feb. 4. At the event, bookings from artificial intelligence-related products and services will likely be discussed.
Heading into the IBM earnings report, the computer company owned a Composite Rating of 80 out of a best-possible 99, according to IBD Stock Checkup.
IBM stock had gained 2% in 2025 and had advanced nearly 20% over the past 52 weeks.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.