IBM stock moved markedly higher in afterhours trade, after the compute stalwart reported a jump in fourth-quarter revenue as growth in its Software and Infrastructure businesses offset a slower pace in Consulting.
Revenue rose 12% to $19.70 billion in the quarter, ahead of analyst consensus pitched at $19.21 billion. IBM's software revenue increased 14% to $9.03 billion, and infrastructure climbed 21% to $5.13 billion, whilst consulting revenue rose 3% to $5.35 billion.
Gross profit margin was 60.6% on a GAAP basis, and, operating (non-GAAP) gross margin was 61.8%. Operating diluted earnings per share came on at $4.52.
IBM pointed investors to momentum in its AI work, highlighting that its generative AI book of business now stands at more than $12.50 billion.
"In the fourth quarter, we delivered strong revenue growth, with double-digit Software performance," CEO Arvind Krishna said.
"Additionally, Infrastructure continued its double-digit revenue growth with the robust adoption of the next generation of our mainframe platform."
For the full year, IBM reported revenue of $67.50 billion, up 8% year-on-year. Free cash flow amounted to $14.7 billion.
IBM, meanwhile, set expectations for 2026 that include more than 5% constant-currency revenue growth. It also expects full-year free cash flow to increase by about $1 billion year-on-year.
The IT firm declared a regular quarterly cash dividend of $1.68 per share.
In New York's afterhours trade, IBM was up $22.49 or 7.65%, at $316.65.
