International Business Machines Corp. (IBM, Financials) delivered better-than-expected first-quarter results, calming investor nerves around federal spending cuts and broader market volatility. Revenue rose nearly 1% to $14.5 billion, and adjusted earnings reached $1.60 per share, topping analyst forecasts, according to Bloomberg.
Shares climbed about 5% in extended trading after closing at $245.48. IBM has gained 12% this year, outpacing the S&P 500 Index's 8.6% decline.
The company projected second-quarter sales between $16.4 billion and $16.8 billion, ahead of Wall Street's average estimate of $16.3 billion. Full-year guidance remains unchanged, with expectations for about $13.5 billion in free cash flow and at least 5% revenue growth.
IBM said about 15 government contracts have been canceled or paused, affecting roughly $100 million in future payments. Federal sales account for less than 5% of overall revenue, softening the blow from spending cuts under President Donald J. Trump's administration and Elon Musk's Department of Government Efficiency.
The company's AI consulting and software bookings topped $6 billion since mid-2023, with most coming from its consulting division. Software sales rose 7% to $6.3 billion, while consulting and infrastructure units posted slight declines. IBM is pushing deeper into software and services through acquisitions like HashiCorp Inc. and Apptio.
