NEW YORK: IBM beat analysts’ estimates for second-quarter revenuey, riding on strong demand for its software and higher artificial intelligence (AI)-linked spending by clients looking to tap the booming technology, sending its shares up 4% in extended trading.

The company has focused on expanding its Watsonx platform that allows users to deploy chatbots or enhance code for AI programmes, while also making its Granite family of AI models open-source to help popularise its AI services.

IBM reported revenue of US$15.77bil, compared with analysts’ average estimate of US$15.62bil, according to LSEG data.

Big Blue’s stock has gained about 12% so far this year, as investors bank on a rally in shares of AI-linked companies.

Software revenue increased about 7% to US$6.74bil. About 75% of the revenue was recurring, chief financial officer James Kavanaugh told Reuters.

The company’s AI Book of Business - a combination of bookings and actual sales across various products - grew to US$2bil, of which about US$1bil was added in the second quarter.

“The commercialisation of Generative AI is accelerating, positioning diversified enterprise technology companies like IBM to capitalise on the growing demand for AI integration,” said Tejas Dessai, a research analyst at Global X.

Consulting made up 75% of the AI book with the rest coming from software, Kavanaugh said.

 - Reuters