IBM Stock: Shares Drop Despite Beating Earnings Expectations

IBM shares tumbled significantly on Thursday following the release of its first quarter 2025 earnings report. Despite exceeding analyst expectations, the stock plunged 5.69% during regular trading hours after initially showing weakness in after-hours trading on Wednesday. The technology veteran reported a modest revenue increase of 0.5% to $14.54 billion compared to $14.46 billion in the same period last year. On an adjusted basis, earnings per share reached $1.60, substantially surpassing the average analyst forecast of $1.43. The company also maintained its full-year guidance, with management projecting second-quarter revenue between $16.40 and $16.75 billion.

Looking Deeper at the Decline

The selloff appears puzzling given the solid performance metrics, but a closer examination reveals potential investor concerns. GAAP earnings showed a significant decline, with net income dropping to $1.06 billion ($1.12 per share) from $1.61 billion ($1.72 per share) in the prior year's quarter. This substantial reduction in GAAP profitability likely triggered negative sentiment among investors, despite the company's better-than-expected adjusted results. Notably, while IBM struggled, other technology sector stocks managed to hold steady or even gain ground on the same trading day, highlighting the specific challenges facing IBM shares.

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Source StockWorld