New York, January 29, 2026, 18:43 EST — After-hours
- IBM shares climbed roughly 5% in late trading, maintaining gains after their earnings report
- The company projected over 5% revenue growth for 2026, measured on a constant-currency basis
- Traders are eyeing Red Hat demand closely, while also keeping tabs on the risk of a Washington shutdown following management’s warning about earlier disruptions
International Business Machines Corp shares jumped roughly 5% in after-hours trading Thursday, hitting $309.24. The boost came after the company beat quarterly estimates and unveiled a strong 2026 outlook, pushing the stock back into positive territory. During the session, shares fluctuated between $303.51 and $323.78, closing up $14.66 from Wednesday’s finish.
This shift is significant as the market grows less tolerant of hefty tech spending, particularly when “AI” budgets outpace profit gains. IBM’s software and services typically react quickly when firms adjust their IT spending up or down.
This comes as investors wrestle with distinguishing AI “activity” from actual AI-driven cash returns. For IBM, the key question is whether software can sustain growth while consulting revenues fluctuate and the hybrid-cloud narrative faces practical challenges.
IBM reported a 12% jump in fourth-quarter revenue, hitting $19.7 billion, while adjusted earnings came in at $4.52 per share. Software revenue climbed 14%, and infrastructure surged 21%. The company expects revenue to grow more than 5% in 2026 on a constant-currency basis, excluding exchange-rate effects. Free cash flow is forecast to increase by about $1 billion from 2025. IBM also announced a quarterly dividend of $1.68 per share, payable March 10 to shareholders of record on Feb. 10. (IBM Newsroom)
LSEG data revealed IBM outperformed analyst expectations on both revenue and profit, driven by strong demand for software that automates IT tasks and manages data as clients expand their AI systems. The company announced it will discontinue reporting its “AI book of business” metric starting in Q1. CFO Jim Kavanaugh told Reuters that a prior U.S. government shutdown trimmed Red Hat’s growth by “a couple points,” noting the federal government makes up about 15% of hybrid-cloud bookings. (Reuters)
IBM climbed while the S&P 500 edged down and the Nasdaq dipped, as investors worried if massive AI investments will deliver quick returns. “There are all sorts of storm clouds in the background,” John Praveen, managing director and co-CIO at Paleo Leon, told Reuters. (Reuters)
Some analysts focused on the cash projection. Evercore’s Amit Daryanani described IBM’s free-cash-flow guidance for 2026 as “fairly conservative,” adding he spotted “multiple levers for upside,” according to a note referenced by Investing.com. (Investing)
In a separate move, a U.S. SEC filing on Thursday revealed IBM is lining up a fresh issuance of senior unsecured notes, paired with a simultaneous euro notes offering. The funds raised will go toward general corporate use — underscoring how funding costs and deal financing remain a key focus in the short term. (SEC)
That said, risks remain. Consulting growth has been tepid, Red Hat’s momentum has slowed, and a fresh Washington shutdown could once again derail government-related deals—just as the market seeks firmer evidence that AI demand is sustainable, not a one-off.
After the earnings release, the key question is if IBM can maintain its post-report gains in Friday’s trading amid ongoing shifts in software and “AI trade” stocks. For income-focused investors, the next date to watch is Feb. 10, when IBM’s $1.68 quarterly dividend record date arrives.
