July 24 (Reuters) - IBM ( IBM ) beat analysts' estimates

for second-quarter revenue on Wednesday, riding on strong demand

for its software and higher AI-linked spending by clients

looking to tap the booming technology.

The company reported revenue of $15.77 billion, compared

with analysts' average estimate of $15.62 billion, according to

LSEG data.

IBM ( IBM ) has focused on expanding its Watsonx platform that

allows users to deploy chatbots or enhance code for AI programs,

while also making its Granite family of AI models open-source to

help popularize its AI services.

Sales in the software segment increased about 7% to $6.74

billion. About 75% of the revenue was recurring, CFO James

Kavanaugh told Reuters.

The company's AI Book of Business - a combination of

bookings and actual sales across various products - grew to $2

billion, of which about $1 billion was added in the second

quarter.

Consulting made up 75% of the AI book with the rest coming

from software, Kavanaugh said.

Still, consulting revenue fell about 1% to $5.18 billion as

clients cut back on discretionary spending and short-term

consulting projects.

"You're seeing an overall very dynamic macroeconomic

environment, and underneath that, clients are choosing

technology for competitive advantage. They are spending on

GenAI," Kavanaugh said.

"But they are making trade-off decisions and spending

reprioritizations, and you see that play out within consulting."

Companies have prioritized spending on longer-term

consulting projects centered on their AI businesses - revenue

from which is yet to be reflected in IBM's ( IBM ) books.

Still, second-quarter adjusted profit of $2.43 per share

beat estimates of $2.20, as robust sales in the high-margin

software business have helped offset consulting weakness.