- In the second quarter, IBM’s sales grew by 2% to $15.8 billion, with the software division seeing revenues climb by 7% to $6.7 billion, both exceeding analysts’ expectations.
- IBM’s net profit for the second quarter was $1.83 billion, up from $1.58 billion in the same period last year.
OUR TAKE
IBM’s strong Q2 results reflect growing enterprise demand for AI technologies. With a focus on consulting and software sales, the company’s generative AI business has reached over $2 billion. The expansion of watsonx and open-sourcing of Granite models underscore IBM’s commitment to AI leadership and capitalising on the market’s growth.
–Vicky Wu, BTW reporter
What happened
International Business Machines Corporation (IBM) has reported a significant increase in bookings for its artificial intelligence business, driven by enterprise customers looking to adopt the latest AI technologies.
In the second quarter, IBM’s sales grew by 2% to $15.8 billion, slightly exceeding the average analyst estimate of $15.6 billion. The software division saw revenues climb by 7% to $6.7 billion, surpassing analysts’ expectations. The company reported adjusted earnings of $2.43 per share, well above the consensus estimate of $2.20 per share. Total revenue for the period stood at $15.77 billion, exceeding the expected $15.62 billion. IBM’s net profit for the quarter was $1.83 billion, up from $1.58 billion in the same period last year.
IBM’s CEO, Arvind Krishna, noted in an interview that about three-quarters of the AI bookings consist of consulting services, with the remaining portion coming from software sales. He anticipates that over time, the proportion of revenue from software will increase.
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Why it’s important
Krishna stated that the company’s business for generative AI has expanded to over $2 billion, driven by the introduction of its watsonx development platform a year ago. In recent months, IBM has concentrated on broadening the watsonx platform, enabling firms to develop and deploy AI chatbots and improve the coding for other AI applications. Moreover, IBM recently open-sourced its Granite family of large language models to promote the adoption of its other AI services.
“Given our first-half results, we are raising our full-year view of free cash flow, which we now expect to be more than $12 billion,” Krishna said, “We remain confident in the positive macro outlook for technology spending.”
Tejas Dessai, a research analyst at Global X, stated that the commercialisation of generative AI is accelerating, positioning diversified enterprise technology firms like IBM to capitalise on the growing demand for AI integration.
