IBM stock rockets to new all-time high on AI bookings
- IBM stock rose as much as 13% on Thursday, its best intraday price action in more than a decade.
- IBM reported Q4 adjusted EPS of $3.92, 14 cents ahead of expectations.
- AI bookings rose $2 billion QoQ in the fourth quarter.
- Multiple analysts raised their price targets on IBM, impressed by guidance for 2025 FCF.
International Business Machines (IBM) stock surged to its best advance in over a decade on Thursday after the tech conglomerate upended expectations with bookings in the fourth quarter for its artificial intelligence (AI) offerings.
Despite other segments declining in sales from a year earlier, IBM reported 10% annual revenue growth from its software unit, which enticed investors as well.
Both the Dow Jones Industrial Average (DJIA), which includes IBM, and the S&P 500 have advanced about 0.15% on Thursday morning, while the NASDAQ has shed about 0.3% at the time of writing.
IBM stock news
For the fourth quarter, IBM reported adjusted earnings per share (EPS) of $3.92, which was 14 cents better than the Wall Street consensus.
On revenue, IBM reported $17.55 billion in sales, up 1% from a year earlier and in-line with consensus.
RBC Capital Markets was impressed with the result enough to raise its price target on IBM stock from $250 to $276. Analyst Matthew Swanson pinpointed free cash flow, generative AI, and Red Hat growth as the primary reasons for optimism.
The big news was that IBM added $2 billion in bookings to its nascent AI business in just the fourth quarter. That $2 billion mostly came from its consulting business but adds to the total of $5 billion in AI bookings to date.
IBM management expects just 5% revenue growth in 2025 overall, but the market and many analysts are impressed by guidance expecting $13.5 billion in free cash flow for the full year.
Evercore raised its price tag on IBM stock from $240 to $275, retaining its Outperform rating.
Software, however, appears to be the only growth business. It reported $7.9 billion in revenue in Q4, up 10% YoY.
Meanwhile, consulting saw a drop of 2% in revenue YoY. Infrastructure revenue declined nearly 8% YoY, and financing dropped 3% YoY.
IBM stock forecast
IBM flew above prior resistance near $237 on Thursday. Now at a new all-time high, IBM shares interestingly have been circling the 161.8% Fibonacci level near $258. Above there lies the 261.8% Fibo near $277. Below here lies the 100% Fibo placeholder just above $246.
Although there will surely be profit-taking at this juncture, expect a close above $258 to be highly bullish for IBM stock.
IBM daily stock chart
Author
Clay Webster
FXStreet
Clay Webster grew up in the US outside Buffalo, New York and Lancaster, Pennsylvania. He began investing after college following the 2008 financial crisis.
