What drove IBM's earnings growth in Q2 2024?

IBM's earnings growth in Q2 2024 was primarily driven by strong performance in its software segment and resilient consulting services, despite a slight decline in revenue compared to the previous year:

1. Software Segment Growth: IBM's software segment experienced a significant boost, with annual recurring revenue growing by 8%. This growth was fueled by heightened demand for Data & AI solutions and robust sales of Red Hat products. The introduction of IBM Storage Ceph as a Service, announced on March 27, 2025, is likely to contribute to the software segment's continued growth.
2. Consulting Services Resilience: Despite a challenging market for IT spending, IBM's consulting business showed strength, with consulting sales increasing by 6% year-over-year to $5 billion. The company has been gaining market share in this area.
3. Strategic Initiatives: IBM's focus on AI and hybrid cloud strategies has been a key driver of growth. The company's AI initiatives, including the launch of Watsonx, have generated over $1 billion in revenue. The growing demand for AI solutions among enterprises is expected to further boost IBM's software and consulting services.

Overall, IBM's earnings growth in Q2 2024 reflects the company's successful transition towards a hybrid cloud and AI-driven strategy, which is gaining traction in the market.