According to reports, IBM beat analysts' estimates for second-quarter revenue and raised its annual growth forecast for its software business riding on higher AI-linked spending by clients looking to adopt the technology.

The company has open-sourced its Granite family of AI models to promote the spread of AI services, while focusing on expanding its Watsonx platform, which allows for the introduction of chatbots and code extensions for AI programs.

Big Blue's share price rose about 3 percent over extended trading hours, adding to the roughly 12 percent year-to-date rise in the AI-related company's share price.

Software revenue for the quarter was up about 7 percent to $6.74 billion. The 113-year-old company expects the division to grow at a low-single-digit rate in 2024, up from its prior forecast of slightly above the high-single-digit end of the range.

The company's AI Book of Business (a combination of bookings and actual sales of various products) increased to $2 billion, of which about $1 billion was added in the second quarter.

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

Consulting revenues fell about one percent to $5.18 billion in the second quarter as clients reduced discretionary spending and short-term consulting projects amid rising long-term interest rates and inflationary pressures.

“You're seeing an overall very dynamic macroeconomic environment, and underneath that, clients are choosing technology for competitive advantage. They are spending on GenAI,” says Chief Financial Officer James Kavanaugh.

The companies have prioritized spending on long-term consulting projects, primarily AI projects, whose revenues are not yet reflected on IBM's books.