IBM beat Wall Street estimates for second-quarter revenue and profit on Wednesday, helped by renewed sales in its mainframe business as artificial intelligence upgrades spurred demand for the systems, which are capable of processing vast amounts of data.
Clients have focused on investing in AI infrastructure expansion as macroeconomic uncertainty and ongoing trade negotiations prompt businesses to prioritize spending on the booming technology.
Shares of the company fell 4% in extended trading, after a nearly 30% rise this year.
“All of us are still operating in a very dynamic macroeconomic environment,” finance chief Jim Kavanaugh told Reuters.
Sales of IBM’s latest mainframe — powered by chips specialized for AI applications — kicked off in June, boosting second-quarter revenue following a three-year cycle for the system’s previous version.
The Big Blue reported revenue of $16.98 billion for the June quarter, up nearly 8% from last year and beating the analysts’ average estimate of $16.59 billion, according to data compiled by LSEG.
The infrastructure segment, which houses its mainframe, reported revenue of $4.14 billion, beating estimates of $3.81 billion.
IBM did not provide a forecast for the third quarter, after it broke tradition in April and issued a one-off quarterly outlook to give investors more clarity at a time when U.S. President Donald Trump’s global tariffs were first going into effect.
“That quarterly guidance was really driven by the unprecedented volatility of the foreign exchange markets and what we were dealing with 90 days ago,” Kavanaugh said.
“What is different over the past 90 days — the FX world is kind of stabilized … so we reverted back to our standard practice.”
Sales in the consulting business also grew 3% in the quarter to $5.31 billion, ending five consecutive quarters of revenue declines.
Businesses are increasingly turning to IBM’s consulting business as they seek expertise on integrating AI products and conducting operations in a rapidly evolving economic environment.
Its “AI book of business,” which combines bookings and actual sales across various products, grew to $7.5 billion, up $1.5 billion from the previous quarter.
Second-quarter adjusted earnings of $2.80 per share also beat estimates.
Source: https://money.usnews.com/
