Oct 22 (Reuters) - IBM ( IBM ) beat Wall Street

estimates for third-quarter revenue and profit on Wednesday,

driven by booming demand for its software and new mainframe as

the rush to deploy AI models boosts sales for the underlying

technology supporting them.

Businesses have prioritized spending on improving their

platforms as they upgrade their systems to develop

data-intensive artificial intelligence tech, helping drive

demand for IBM's ( IBM ) high-margin software segment.

The company's shares have risen nearly 30% so far this year,

as investors bet on its potential to benefit from the AI boom.

IBM ( IBM ) recorded third-quarter revenue of $16.33 billion,

beating analysts' average estimate of $16.09 billion, according

to data compiled by LSEG.

The company's adjusted profit of $2.65 per share for the

September quarter also came in above estimates of $2.45.

The software segment grew 10% to $7.21 billion, beating

estimates.

Big Blue also saw strong demand for its latest mainframe -

an iteration of a high-performance computer- following a

three-year cycle for its previous version.

The new mainframe, which is powered by chips specialized for

AI applications, is being widely used by the financial industry,

allowing for the maintenance of strict data residency and

encryption rules as they work on adopting AI tech, CFO Jim

Kavanaugh told Reuters.

"Addressing client pain points, around AI, around

sovereignty ... that is driving the client buying behavior

overall."

The infrastructure segment, housing its mainframe, saw

revenue rise 17% to $3.56 billion in the quarter.

However, IBM's ( IBM ) AI book of business grew to $9.5 billion, up

$2 billion from the second quarter, but did not include

mainframe sales.

Revenue and bookings from consulting made up about $7.5

billion of the book, which combines bookings and actual sales

across various products, Kavanaugh said.

Consulting revenue grew about 3% to $5.32 billion, as

clients prioritized spending on big-ticket AI-linked consulting

projects.

IBM ( IBM ) also raised its outlook for the current fiscal year,

expecting revenue to grow more than 5% at constant currency, up

from its prior forecast of at least 5% growth.