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The second-quarter revenue was the largest IBM had ever recorded in three years.
International Business Machines Corp (NYSE: IBM) stock jumped over 4% as of July 20, 2021, at 5:02 a.m. EDT to trade around $143.25. The tweak in IBM stock during today’s premarket trading session was attributed to news that the company reported better than expected second-quarter earnings. During Q2, IBM reported adjusted earnings per share of $2.33 against $2.29 expected by analysts according to research by Refinitiv. Additionally, the company recorded a revenue of $18.75 billion versus $18.29 billion expected by analysts according to Refinitiv.
“The overall spend environment continues to improve,” CEO Arvind Krishna said on a conference call with analysts. “With the economy reopening in many parts of the world, many markets and industries are getting back on track. We see this in North America and select industries.”
Notably, the second-quarter revenue was the largest the company ever recorded in three years. The spike was attributed to a huge demand for cloud computing services as companies push to reach the global market and rebound from the Covid pandemic.
IBM Stock and Q2 2021 Earnings
As a technology-based company, IBM has seen its products gain popularity globally during the coronavirus outbreak. According to market analytics provided by MarketWatch, IBM shares are up 9.41% and 9.56% in the past year and year-to-date respectively through Monday.
However, they are down approximately 5.77%, and 1.68% in the past month and five days respectively through Monday.
Having reported the strongest quarter in revenues, IBM investors anticipate the foreseeable future to be in favor of them. Furthermore, the demand is expected to maintain or heighten as more countries open up their economies.
During the past year, IBM has seen its market valuation sustained over $124 billion. Wall Street analysts are convinced the company can deliver more in the coming quarters. According to a survey conducted by MarketWatch, IBM stocks received an average of a Hold rating from 18 ratings.
Although the company experienced one of its best quarters, the competition is growing in the cloud computing industry. As a result, IBM spent $1.75 billion on acquisitions, the highest in a single quarter since it closed the $34 billion Red Hat deal in the third quarter of 2019.
During Q2, IBM total cloud revenue grew by approximately 13% compared to the same time last year.
”The growth we’re seeing is very encouraging,” Chief Financial Officer Jim Kavanaugh said in an interview. “It’s proof our clients are adopting the hybrid-cloud platform.”