(Bloomberg) -The shares of International Business Machines Corp. increased after the company projected strong revenue growth in the new financial year and jump in AI related orders.
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For the financial year ending in December 2025, Big Blue said it expects $ 13.5 billion in free cash flow. That's above the $ 12.9 billion predicted by Wall Street. Revenue will expand at least 5% in constant currency, although current exchange rates would dump that expansion of two percentage points, the company said on Wednesday in a statement.
Orders for AI consultation and software have exceeded $ 5 billion since mid -2023, said the Armonk, a New York company. That's up from the $ 3 billion IBM revealed during its last quarterly earnings report in July. About 80% of orders come from the consultation unit, with the rest of software.
IBM has worked to transform itself from being a conventional computer company that focuses on high growth software and services. He has used acquisitions to expand the company's products, including a proposed possession of Hashicorp Inc. published in April and purchased Apptio for $ 4.6 billion in 2023.
“Three years ago, we set out a vision for a more profitable IBM growing faster. I am proud of the work that the IBM team has done to meet or exceed our commitments, ”CEO Arvind Krishna said in the statement.
The shares rose as much as 12% to $ 255.50 after markets opened in New York on Thursday.
Total sales increased by 1% to $ 17.6 billion in the period ending December 31. Analysts estimated, on average, $ 17.5 billion, according to data drawn up by Bloomberg. The company's software unit was its biggest and fastest grew, expanding 10% to $ 7.92 billion in the quarter.
Software expansion was fired by a 16% growth in Red Hat, an IBM business achieved in 2019. Customized profit was $ 3.92 per quarter, before the average estimate of $ 3.74.
Sales at IBM consultation unit for fourth consecutive quarter declined to $ 5.18 billion. Customers continue to redirect funding from traditional consultation projects to AI focuses, Chief Financial Officer Jim Kavanaugh said in an interview.
The Trump administration has said it will reduce government -wide spending, which has involved investors for the potential impact on technology companies. Kavanaugh said that 3% to 4% of IBM revenue is attached to the federal government, and technology initiatives that can be taken by the new administration are “a significant opportunity.”