Oct 23 (Reuters) - International Business Machines ( IBM )

beat analysts' estimates for third-quarter profit on

Wednesday, helped by robust growth in its high-margin software

segment as businesses prioritized spending on its IT services

and doubled down on AI adoption.

IBM's ( IBM ) software segment recorded its biggest jump in

quarterly revenue in three years, driven by sustained demand

from enterprises expanding their cloud infrastructure to

accommodate generative AI technology.

Software growth has helped drive profits. The Big Blue

recorded adjusted earnings of $2.30 per share for the third

quarter, beating analysts' average estimate of $2.23 per share,

according to data compiled by LSEG.

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

bookings and actual sales across various products - grew to $3

billion, up $1 billion from the second quarter.

While IBM ( IBM ) has been expanding its Watsonx platform, which

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

the AI book is driven by consulting. The book was one-fifth

software and four-fifths consulting in the third quarter.

However, this growth is not yet reflected in the overall

consulting segment, as companies have directed spending towards

longer-term consulting projects focused on their AI businesses,

which are yet to show up in IBM's ( IBM ) results.

"You've got this technological shift around GenAI, and many

clients are looking at how to free up cost and productivity to

go invest in GenAI," Chief Financial Officer James Kavanaugh

told Reuters.

Revenue from consulting was relatively flat in the third

quarter, down about 0.5% at $5.15 billion, compared to estimates

of $5.24 billion.

"There's still temporary challenges around interest rates,

around inflation, around geopolitical tension, around

demographic shifts," Kavanaugh said in relation to weakness in

consulting.

Software revenue grew close to 10% to $6.52 billion in the

three months ended Sept. 30, beating estimates of $6.37 billion.

However, declines in the infrastructure business, which

includes the legacy mainframe business, weighed on overall

revenue. Total sales grew about 1% to $14.97 billion, missing

estimates of $15.07 billion.