IBM results beat expectations as the company pushes up full-year guidance

In a surprising turn of events, IBM's shares experienced a dip of up to 5% in after-hours trading on Wednesday, following the release of its second-quarter earnings that surpassed Wall Street expectations. The tech giant reported a nearly 8% increase in revenue year-over-year for the quarter, marking a significant rebound from the first quarter's growth of less than 1%. The company's net income saw a notable rise to $2.19 billion, translating to earnings of $2.31 per share, compared to last year's $1.83 billion or $1.96 per share. IBM's software division reported a robust growth of approximately 10%, generating $7.39 billion, slightly below the analyst consensus of $7.43 billion. However, the unit's gross margin of 83.9% was only marginally lower than the anticipated 84.0%. Consulting revenue also made strides, increasing nearly 3% to $5.31 billion, exceeding the consensus estimate of $5.16 billion. Additionally, the infrastructure segment experienced a remarkable 14% growth, reaching $4.14 billion, which surpassed the average estimate of $3.75 billion. During this quarter, IBM made headlines by unveiling its next-generation z17 mainframe computer and announcing the acquisition of Hakkoda, a data and AI consulting firm. Looking ahead, the company is forecasting over $13.5 billion in free cash flow by 2025, maintaining its previous projection from April. IBM anticipates at least a 5% revenue growth at constant currency for the year. As of the close on Wednesday, IBM's stock has risen by 28% in 2025, significantly outperforming the S&P 500 index's 8% gain during the same timeframe. Company executives are set to discuss these results in a conference call with analysts at 5 p.m. ET. Stay tuned for more updates on this developing story.