What Happened?

Shares of technology and consulting giant IBM (NYSE: IBM) jumped 7.4% in the afternoon session after the company reported strong third-quarter financial results that surpassed expectations, raised its full-year guidance, and announced a breakthrough in quantum computing. 

Revenue reached $16.3 billion, a 9% increase from the previous year, marking its highest growth in several years. This performance was driven by high demand for its artificial intelligence and hybrid cloud offerings, with the company's generative AI business booking over $9.5 billion in deals. Based on these strong results, IBM increased its full-year forecast, now expecting revenue growth of more than 5% and free cash flow of around $14 billion. The stock's rise came after an initial dip following the earnings release, which was attributed to concerns over slower growth in its Red Hat software business.

Is now the time to buy IBM? Access our full analysis report here.

What Is The Market Telling Us

IBM’s shares are not very volatile and have only had 7 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.

The previous big move we wrote about was 17 days ago when the stock gained 3.3% on the news that it announced a partnership with artificial intelligence firm Anthropic to integrate Anthropic's AI models into its software. 

The collaboration aimed to boost productivity for business customers by embedding Anthropic's Claude family of large language models (LLMs) into IBM's software portfolio. The first integration was planned for a new development tool for software engineers. IBM reported that in early testing, more than 6,000 internal users experienced average productivity gains of 45%. This partnership was seen as a significant step to strengthen IBM's position in the expanding enterprise AI market, complementing the existing demand for its WatsonX platform.

IBM is up 39.2% since the beginning of the year, and at $306.10 per share, has set a new 52-week high. Investors who bought $1,000 worth of IBM’s shares 5 years ago would now be looking at an investment worth $2,728.

Here at StockStory, we certainly understand the potential of thematic investing. Diverse winners from Microsoft (MSFT) to Alphabet (GOOG), Coca-Cola (KO) to Monster Beverage (MNST) could all have been identified as promising growth stories with a megatrend driving the growth. So, in that spirit, we’ve identified a relatively under-the-radar profitable growth stock benefiting from the rise of AI, available to you FREE via this link.