01:42 PM EDT, 10/10/2024 (MT Newswires) -- IBM ( IBM ) is expected to post "solid" third-quarter results amid continued strength in generative artificial intelligence consulting, RBC Capital Markets said Thursday.

The technology giant is scheduled to report results Oct. 23. RBC projects adjusted earnings at $2.24 a share on revenue of $15.08 billion. Analysts polled by Capital IQ are looking for $2.22 and $15.04 billion, respectively.

"Peer results would suggest continued strength in consulting, while software traction likely remains the larger catalyst for sentiment improvement," RBC analysts, including Matthew Swanson, said in a note to clients.

IBM ( IBM ) shares were down 0.6% in Thursday afternoon trade, but are up 42% so far this year.

The company saw strong first-half performance in software amid strength in its recurring revenue base and "early traction" in GenAI, Chief Financial Officer James Kavanaugh said on an earnings conference call in July, according to a Capital IQ transcript. "Our book of business in (GenAI) inception-to-date is greater than $2 billion, and about (three-fourth) of it represents consulting signings with strong quarter-over-quarter momentum."

RBC said it will be focused on the Red Hat technology where a rebound paused in the second quarter, though IBM ( IBM ) reiterated its outlook for low-double-digit growth, implying an acceleration in the second half. "An area of strength has been infrastructure, which has had a longer tail than expected as we approach a new refresh cycle in 2025," the analysts said.

Alongside reporting its second-quarter results in July, the company said it expected to have "more than" $12 billion in free cash flow in 2024, compared with prior expectations for about $12 billion.

"Sentiment has improved throughout the quarter, as we continue to see increasing thematic inbounds in addition to FCF support," RBC said.

Job posting are expected to have increased 6% sequentially in the third quarter following a 19% drop in the previous quarter, according to the note. "Despite recent news of recent workforce reductions, this is likely the rebalancing management had mentioned in previous quarters," the analysts said. In the fourth quarter so far, job postings are up an additional 3%, they added.

RBC maintained its outperform rating on the IBM ( IBM ) stock and increased its price target to $250 from $211, citing "improving efficiency and solidifying macro environment."

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