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IBM (NYSE: IBM) reported its second quarter results earlier this week that outpaced market expectations. Despite the headwinds due to the current geo-political situation, IBM reiterated its outlook for the rest of the year.
 

IBM’s Financials

For the second quarter, IBM’s revenues grew 8% to $16.98 billion, ahead of the market’s expectations of $16.59 billion. Earnings came in at $2.80 per share and were also ahead of the expected $2.64 per share.

By segment, software revenue rose 10% to $7.39 billion but missed the consensus of $7.43 billion. IBM’s consulting unit grew 3% over the year to $5.31 billion, ahead of the $5.16 billion estimate. Its infrastructure division revenues grew 14% to $4.14 billion, ahead of the $3.75 billion estimate.

For 2025, IBM maintained an expectation of $13.5 billion in free cash flow and at least 5% revenue growth at constant currency.
 

IBM’s AI Focus

IBM continues to improve its AI offerings. It has grown its Gen-AI book of business from inception to the present at $7.5 billion, compared with $6 billion in April. Last quarter, it announced the release of a new mainframe, z17, that has been built with AI capabilities across hardware, software, and systems operations. The new mainframe is powered by IBM’s new Telum II processor to power 50% more AI inferencing operations per day. The z17 incorporates several AI-related features to enable deeper analysis and understanding of transactional data and increasing predictive accuracy. 
 

IBM’s Hakkoda Acquisition

Last quarter, it announced the acquisition of Hakkoda Inc., a New York-based leading global data and AI consultancy, for an undisclosed sum. Hakkoda was founded in 2021 and has grown to a rapidly scaling consultancy focused on data modernization activities. Before the acquisition, the firm had raised $5.6 million in a 2021 Series A round and additional funding since from investors including Tercera, Lead Edge Capital, and Casimir Holdings. Through the acquisition, IBM will be able to bolster its data transformation and AI consulting services, especially its IBM Consulting Advantage, the AI-powered delivery platform.

According to market reports, the global spending for enterprise intelligence services initiatives is expected to grow 13% annually to $243 billion by 2028. IBM believes that organizations will need to follow a thoughtful data migration strategy and invest in a modern, multi-use case data platform on the cloud to extract value from their data. Hakkoda is an Elite Snowflake partner, brings several SnowPro core and advanced certifications, and is also an advanced-tier partner of AWS. By integrating Hakkoda, IBM aims to shorten project timelines and improve cost efficiency. As part of the deal, Hakkoda’s hundreds of consultants across the US, Latin America, India, Europe, and the UK will become a part of IBM’s consulting division.

IBM’s stock is trading at $260.51 with a market capitalization of $242.1 billion. It touched a 52-week high of $296.16 earlier this month. The stock has been climbing from the 52-week low of $181.81 that it was trading at last July.

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