Why IBM Stock Is Soaring in After-Hours Trading
Key Points
IBM beat analysts' revenue and profit expectations for the fourth quarter of 2025.
Management projects free cash flow growth from 2025 to 2026.
Shares are still attractive for those seeking AI exposure.
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After inching 0.10% higher during today's regular trading session, International Business Machines (NYSE: IBM) stock is jumping sharply higher in after-hours trading this afternoon. In addition to the tech company's fourth-quarter 2025 financial results, management's 2026 guidance is providing plenty of fodder for the bulls to feast upon.
As of 5:27 p.m., shares of IBM are up 8.1% from their closing price of $294.16 during today's regular market session.
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The free cash flow is expected to flow even stronger next year
Reporting fourth-quarter 2025 revenue of $19.7 billion, IBM exceeded the analysts' consensus that the company would post sales of $19.2 billion.
The company also provided a surprise at the bottom of the income statement, reporting adjusted earnings per share (EPS) of $4.52. Analysts had anticipated that IBM would post Q4 2025 adjusted EPS of $4.29.
Looking ahead, management is providing investors with even more reasons to click the buy button. With strong demand for its artificial intelligence (AI) offerings (the company reported its generative AI book of business now totals over $12.5 billion), IBM projects 2026 revenue to grow more than 5% year-over-year on a constant-currency basis. Plus, management forecasts strong free cash flow growth in 2026 -- an increase of about $1 billion over the $14.7 billion in free cash flow that it generated in 2025.
Is IBM stock a buy after the company shared positive Q4 2025 results
Trading at 24.3 times forward earnings, shares of IBM aren't sitting in the bargain bin, but the company's strong financial performance in 2025 -- and presumed growth in 2026 -- make it a compelling option for those with lower risk tolerances yet still interested in AI exposure.
Should you buy stock in International Business Machines right now?
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Scott Levine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends International Business Machines. The Motley Fool has a disclosure policy.
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