IBM Beats Q3 Forecast, Stock Gains After Hours

International Business Machines Corp. (IBM) surprised analysts on Wednesday, reporting third‑quarter revenue of $17.1 billion – a 5% rise from the same period a year ago and a shade above the $16.83 billion consensus.

The earnings beat was anchored by two clear trends. First, the Software segment surged 8.3% to $7.8 billion, outpacing forecasts, thanks to robust cloud‑related sales. Red Hat revenue jumped 11% and the data‑software portfolio climbed an impressive 19%.

Second, the Infrastructure side showed signs of life after a sluggish start to the year. Revenue rose 4% to $3.7 billion, and chief financial officer Jim Kavanaugh highlighted that roughly two‑thirds of the mainframe and tied‑software deals postponed earlier have now been closed.

Clients had temporarily redirected IT budgets toward specialty AI chips, putting some enterprise server purchases on hold. But according to CEO Arvind Krishna, “Our customers are now deploying Super Intelligence in ways that reshape entire operating models,” indicating a normalization of core infrastructure spending.

On the balance sheet, IBM ended the quarter with $11.1 billion in cash and marketable securities. The company has already deployed about $11.4 billion in acquisitions this year, sharpening its cloud, automation and data capabilities.

Financially, IBM reaffirmed its full‑year revenue growth target of 4%‑5% in constant currency and lifted its free‑cash‑flow outlook, now expecting a rise of more than $1 billion year‑over‑year. Through the first nine months, free cash flow topped $7.8 billion, and the firm returned $1.6 billion to shareholders via the Q3 dividend.

Investors reacted positively – the shares nudged up about 3% in after‑hours trading – even though the stock is down roughly 17% so far this year. Retail sentiment on platforms like Stocktwits remains bullish, with heightened message activity around the stock.

Overall, IBM’s blend of steady software momentum and a rekindled mainframe pipeline seems to have steadied the ship, giving the tech stalwart a clearer path toward its 2026 financial goals.