International Business Machines (IBM) stock reached its highest point in over a decade following its fourth-quarter earnings report, driven by impressive AI bookings and software revenue growth. The company exceeded earnings expectations and witnessed a significant increase in AI bookings, fueling optimism among analysts.
IBM stock experienced a remarkable surge on Thursday, soaring as much as 13% - its most significant intraday price increase in over a decade. This impressive performance followed the release of IBM 's fourth-quarter earnings report, which exceeded market expectations on several key metrics. The company reported an adjusted earnings per share (EPS) of $3.92, surpassing the consensus estimate by 14 cents.
Furthermore, IBM's bookings for artificial intelligence (AI) offerings jumped by $2 billion quarter-over-quarter in the fourth quarter, highlighting the growing momentum in this strategic area. This surge in investor confidence was further fueled by IBM's guidance for 2025 free cash flow, which impressed multiple analysts, prompting them to raise their price targets on the stock. International Business Machines (IBM) captivated Wall Street with its fourth-quarter earnings, driven by robust AI bookings and strong software revenue growth. Although other segments experienced year-over-year sales declines, IBM's software unit demonstrated a 10% annual revenue increase, attracting significant investor attention. Analysts at RBC Capital Markets were particularly impressed with the results, elevating their price target on IBM stock from $250 to $276. Analyst Matthew Swanson emphasized free cash flow, generative AI, and the continued expansion of Red Hat as primary drivers of optimism surrounding IBM's future prospects.The standout achievement for IBM in the fourth quarter was the $2 billion in bookings added to its burgeoning AI business. This significant influx, primarily originating from its consulting division, brings the total AI bookings to $5 billion. While IBM management anticipates a 5% overall revenue growth in 2025, the market and numerous analysts remain highly optimistic, buoyed by the projected $13.5 billion in free cash flow for the full year. Evercore, for example, increased its price target on IBM stock from $240 to $275, maintaining its Outperform rating. The software segment emerged as the sole growth driver, generating $7.9 billion in revenue during the fourth quarter, representing a 10% year-over-year increase. Conversely, consulting revenue experienced a 2% year-over-year decline, infrastructure revenue dropped nearly 8%, and financing revenue fell 3%. Looking ahead, IBM stock surged past previous resistance at $237 on Thursday, reaching a new all-time high. The stock is now positioned near the 161.8% Fibonacci level around $258, with subsequent resistance at the 261.8% Fibonacci level near $277. Conversely, support lies at the 100% Fibonacci level just above $246. While profit-taking is anticipated, a closing price above $258 would likely signal a highly bullish trend for IBM stock
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