IBM Posts Higher 1Q Sales, Buoyed by AI — Update

By Elias Schisgall

IBM reported rising revenue and a higher profit in the first quarter, buoyed by the growing adoption of artificial-intelligence tools by businesses.

"AI continues to be a tailwind for our business," IBM Chief Financial Officer Jim Kavanaugh said in an interview. "You see it play out in the results, as we captured demand for both technology and innovation around AI, but also services that help organizations orchestrate, deploy, govern, scale AI across their journeys."

The technology company on Wednesday reported a first-quarter profit of $1.22 billion, or $1.28 a share, compared with a profit of $1.06 billion, or $1.14 a share, a year earlier.

Stripping out certain one-time items, the company logged adjusted earnings of $1.91 a share, ahead of Wall Street's expectation of $1.81 a share, according to FactSet.

Revenue rose to $15.92 billion from $14.54 billion a year prior, amounting to what Kavanaugh said was IBM's highest first-quarter revenue growth in many years. Analysts surveyed by FactSet were expecting revenue of $15.63 billion.

Despite the quarterly earnings beat, IBM maintained its expectations of constant currency revenue growth of at least 5% this year, with free cash flow rising by around $1 billion.

Shares fell about 6.4% in late trading to $235.82. Through Wednesday's close, the stock had lost nearly 15% this year.

Revenue in the company's software segment rose to $7.05 billion, up 11%. Within that segment, hybrid cloud revenues, which includes the company's Red Hat business, were up 13%, while automation revenue rose 10% and data revenue rose 19%.

Consulting revenue rose 4% to $5.27 billion, and infrastructure revenue was up 15% to $3.33 billion.

Free cash flow in the quarter was $2.2 billion, up around $300 million year over year. Analysts were expecting $2.04 billion.

IBM's board of directors also increased the company's quarterly dividend to $1.69 a share, up from $1.68.

The new payout, equal to $6.76 a year, represents a 2.6% annual yield based on IBM's Tuesday closing price of $255.68.

The dividend is payable June 10 to shareholders of record as of May 8.

Write to Elias Schisgall at elias.schisgall@wsj.com

(END) Dow Jones Newswires

April 22, 2026 17:01 ET (21:01 GMT)