Jan 29 (Reuters) - IBM ( IBM ) surpassed analysts'

estimates for fourth-quarter profit on Wednesday, driven by

demand in its high-margin software unit as businesses ramped up

IT spending.

The company's software segment recorded its biggest revenue

jump in five years, as customers prioritized spending on cloud

infrastructure amid a rush to adopt the data-intensive

generative artificial intelligence technology.

IBM's ( IBM ) AI Book of Business - a combination of bookings and

actual sales across various products - stood at more than $5

billion inception-to-date, up about $2 billion from the third

quarter.

The company made its "Granite" family of AI models

open-source in May, in contrast to rivals such as Microsoft ( MSFT )

, which charge for access to their models.

IBM's ( IBM ) approach is in line with Chinese startup DeepSeek,

which last week launched a free AI assistant that it said uses

less data at a fraction of the cost of incumbent services,

fueling concerns over the dominance of U.S. tech.

"DeepSeek was an initiation that open (source) AI can play a

role in the overall GenAI space," IBM ( IBM ) Chief Financial Officer

James Kavanaugh told Reuters in an interview.

He, however, declined to provide details on whether IBM ( IBM )

plans to offer DeepSeek's models on its Watsonx platform, which

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

IBM's ( IBM ) AI book is dominated by consulting, which currently

makes up about 80% of it. Software constitutes only a fifth.

Revenue from the consulting segment fell about 2% to $5.2

billion in the quarter, more than analysts' expectation of an

about 1% drop.

Companies have focused spending on longer-term consulting

deals, centered around integrating AI in their businesses, which

is yet to be reflected in IBM's ( IBM ) revenue.

Total revenue was relatively flat at $17.55 billion for the

quarter and largely in line with analysts' estimates, according

to data compiled by LSEG.

Its software sales growth of more than 10% was also partly

countered by weakness in the infrastructure segment, which

recorded a near-8% decline in revenue as its mainframe business

faces tepid demand on the back of older products.

IBM ( IBM ) posted adjusted per-share earnings of $3.92 for the

quarter ended December, compared with analysts' average estimate

of $3.75.