New York, Jan 28, 2026, 20:53 EST — Markets have closed.
- IBM shares edged mostly flat in late after-hours trading, following a sharp swing triggered by the earnings report.
- The company exceeded fourth-quarter revenue and profit estimates, projecting revenue growth of over 5% in 2026.
- Investors remain focused on Red Hat’s momentum and the potential impact of another U.S. funding lapse on federal demand.
International Business Machines (IBM) shares finished a volatile after-hours session almost unchanged Wednesday. The company beat quarterly estimates but warned of a slowdown in its Red Hat segment due to disruptions with the U.S. government. The stock last traded at $294.16, having surged up to $324.20 earlier in extended trading.
The report is crucial now as IBM occupies a key spot in corporate tech budgets, with execs eager to invest in artificial intelligence without sending costs soaring. It dropped amid a night where investors balanced a Fed pause against mixed responses to major tech earnings.
IBM projects full-year 2026 revenue growth above 5% on a constant-currency basis, stripping out currency fluctuations, along with roughly $1 billion more in free cash flow compared to last year. “We enter 2026 with momentum,” CEO Arvind Krishna said, highlighting that the company’s generative AI “book of business” now exceeds $12.5 billion. IBM Newsroom
IBM reported December-quarter revenue of $19.69 billion and adjusted earnings per share of $4.52, topping LSEG’s forecasts of $19.23 billion and $4.32. Software sales climbed to $9.03 billion. Its Automation and Data segments posted growth of 18% and 22%, respectively, though Red Hat’s expansion slowed to 10% after a federal shutdown late last year hit demand. CFO Jim Kavanaugh noted government business makes up about 15% of hybrid cloud bookings. The company’s “AI book of business” — a running total of AI-related contracts — swelled to $12.5 billion but IBM plans to stop reporting that figure separately starting in Q1. Kavanaugh also flagged the expected 2026 Confluent acquisition would cause roughly $600 million in dilution. Reuters
IBM reported a 12% jump in fourth-quarter revenue and free cash flow hit $7.6 billion, up $1.4 billion from the same period last year. The company returned $1.6 billion to shareholders through dividends during the quarter and finished the year with $14.5 billion in cash and marketable securities. Total debt climbed to $61.3 billion.
Traders face a straightforward first hurdle: can the stock sustain any of its initial earnings bump once regular trading kicks off Thursday, or will Red Hat’s slowdown cap gains? The bigger question is messier — how lasting is IBM’s AI-driven software demand if customers begin delaying their spending decisions again.
The change in disclosure is drawing attention. IBM has highlighted its AI “book of business” as a key metric; dropping that separate figure might push investors to focus more on segment trends and any remarks about backlog and pipeline.
IBM faces a looming threat beyond its control: U.S. government funding may run out at 12:01 a.m. Eastern Time on Saturday, Jan. 31, Reuters reported. The previous shutdown already weighed on Red Hat’s growth and cloud bookings. Another freeze could stall federal IT contracts just as IBM pushes to maintain its software momentum.
Next on the docket: Thursday’s market open, followed by Washington’s funding deadline early Saturday. Should lawmakers dodge a shutdown, investors will turn to Red Hat and software growth for signs to back the post-earnings rally.
