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Key Takeaways
- IBM shares gained after delivering better-than-expected fourth quarter earnings and full-year revenue guidance, driven by demand for its AI products and services.
- The company said its generative AI book of business doubled from the third quarter, benefiting from a number of lucrative consulting and software deals.
- IBM shares could be set to breakout from a rising wedge pattern, nearing in on their record high around $200.
International Business Machines Corporation
Source: TradingView.com
Shares of computing and business services giant IBM (IBM) gained as much as 8% before the opening bell Thursday after the company delivered better-than-expected fourth quarter earnings and full-year revenue guidance, driven by growing demand for its artificial intelligence (AI) solutions and consultancy services.
IBM posted fourth quarter adjusted earnings of $3.87 per share, above expectations of $3.78, with the bottom line expanding 8% from a year earlier. Meanwhile, revenue for the period of $17.38 billion topped analysts’ forecast of $17.30 billion and grew 4% from the December 2022 quarter.
The company’s top line was boosted by its infrastructure business, which reported a 3% jump in revenue from the prior year, driven by rising demand for servers and storage solutions that support AI adoption. A particular area of strength within the division came from the distributed infrastructure category, which grew 8% from strong sales of the tech giant’s Power processing chips. The company also said its generative AI book of business doubled from the third quarter, benefiting from a number of lucrative consulting and software deals.
Looking ahead, the company projects 2024 full-year revenue guidance of between 4% to 6%, ahead of the 3% analysts had expected. While IBM anticipates the economic environment to remain challenging, it projects technology budgets in 2024 to remain at similar levels to last year, helping to drive corporate sales.
IBM shares have remained in a steady uptrend since May last year, with only one significant retracement to the 200-day moving average in October. Today, the stock could be positioned to break above a rising wedge pattern and climb to a 10-year high in the process. If IBM keeps moving upward, the $200 level could be where the stock may find resistance near its record high set in March 2013.
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