New York, Jan 29, 2026, 04:56 EST — Premarket
- IBM shares jumped roughly 8% in premarket trading following quarterly results that beat expectations
- IBM expects constant-currency revenue growth to exceed 5% in 2026, along with an increase in free cash flow
- Investors are focused on Red Hat’s growth cooling off and IBM’s decision to stop reporting its “AI book of business” metric separately
Shares of International Business Machines (IBM) surged in premarket action Thursday, climbing 7.86% to $317.27 by 5:00 a.m. EST. The stock had closed Wednesday at $294.16.
Investors are sorting through a packed earnings slate and a calmer rates environment after the Federal Reserve held steady on policy. Tech stocks have shown mixed responses, with strong earnings quickly attracting buying pressure in late and early trading sessions.
IBM’s latest results land amid a tough debate over whether AI investments are driving steady revenue or just hype. The company topped fourth-quarter revenue and profit forecasts, reporting its “AI book of business” climbed to $12.5 billion. However, it plans to stop breaking out that figure starting next quarter, even as growth at Red Hat slowed to 10%. IBM also highlighted dealmaking moves, including HashiCorp and a planned $11 billion acquisition of Confluent. That Confluent deal could weigh on 2026 earnings by around $600 million. Reuters
IBM posted $19.7 billion in revenue for the fourth quarter, driven by a 14% increase in software and a 21% rise in infrastructure sales. Its IBM Z mainframe business soared 67%, fueled by demand for the newest platform.
IBM projects revenue growth above 5% for 2026 on a constant-currency basis, excluding FX fluctuations, along with roughly a $1 billion rise in free cash flow year-over-year. “We enter 2026 with momentum,” CEO Arvind Krishna said. Investing.com
IBM’s “generative AI book of business” blends software transaction revenue linked to generative AI with new SaaS annual contract value and consulting deals tied to specific offerings, the company explained. Since IBM stopped reporting that number separately in the first quarter, investors must rely more on segment data and management remarks to determine if AI demand is broadening or remains focused in select areas. IBM Newsroom
Red Hat remains the key driver. Growth in its hybrid-cloud segment eased, with CFO Jim Kavanaugh telling Reuters that the late-2025 U.S. government shutdown shaved “a couple points” off growth since federal agencies account for roughly 15% of hybrid cloud bookings. He also cautioned that the looming shutdown threat this week could trigger a “short-term disruption.” Investing.com
Some analysts emphasized the “defensive” angle. Stifel’s David Grossman called IBM’s enterprise software portfolio “more defensive than most vendors,” reaffirming a buy rating and a $325 price target, Barron’s reported.
IBM filed an 8-K on Wednesday, attaching its earnings release under Item 2.02.
Yet the upside scenario isn’t without its flaws. Should government-driven buying remain patchy or Red Hat fail to pick up speed again, investors might see the post-earnings jump as a flash in the pan. On top of that, integration hurdles and acquisition expenses could weigh on performance, while dropping the AI metric cuts transparency just when it’s most needed.
Thursday’s key question: Can IBM maintain the bulk of its premarket gains when regular hours kick in and volume rises? Investors should also mark their calendars — IBM’s $1.68 quarterly dividend will be paid on March 10 to shareholders recorded by Feb. 10.
