IBM enjoyed a 12% spike in its share price on Thursday on the back of a better-than-anticipated revenue forecast.
The upturn represents a more than 10-year high, supported by strong demand for its artificial intelligence (AI) services.
As reported by Reuters, Big Blue is thriving on orders received from its generative AI arm, with its Watsonx platform contributing significantly toward a projection of 4-6% in revenue growth in 2024 after orders doubled for the fourth quarter of last year.
IBM’s expected gains for next year compare very favorably with Wall Street expectations of around 3%.
The company report, released on Wednesday, indicated above market estimates based on the order book for the coming months, but there will also be staff cuts at IBM, offset by new hires in AI-focused roles.
Under the leadership of Arvind Krishna, incumbent CEO since April 2020, the technology corporation with a market cap of $174 billion has moved toward a focus on software and consulting with a timely concentration on AI as clients from different industries seek its integration.
Krishna, who also fulfills the role of company chairman, reflected on the fourth quarter results with the following comment:
“For the year, revenue growth aligned with our expectations, and we exceeded our free cash flow objective. Based on the strength of our portfolio and demonstrated track record of innovation, for 2024, we expect revenue performance in line with our mid-single digit model and about $12 billion in free cash flow.”
IBM’s share price increased to $194.93, its highest level since June 2013, adding around $19 billion to the company’s market capitalization and a year-to-date risk of 18% for the stock.
“A notable edge for IBM is its consulting arm in AI, which, coupled with its increasingly relevant AI software solutions…positions it favorably against competitors,” said May De, an analyst at Global X ETFs, a New York-based fund management company with $51 billion of assets under its watch, as of July 2023.
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