IBM reports $7.80 billion revenue, $2.19 billion net income in Q3

IBM reported third‑quarter earnings that beat analysts’ expectations, but its shares fell in after‑hours trading on Wednesday. Revenue rose about 5% year‑over‑year to $7.80 billion in software, $5.34 billion in consulting and $3.70 billion in infrastructure, while net income climbed to $2.19 billion, or $2.30 per share, up from $1.74 billion a year earlier. The company also announced a purchase of HRL Laboratories, the former Hughes Aircraft research unit owned by Boeing and General Motors, for an undisclosed sum.

The results come as IBM pushes a new “Super Intelligence” strategy that blends artificial‑intelligence tools into broader business transformations. CEO Arvind Krishna said clients are now using the technology to overhaul entire operating models, not just solve isolated problems. Finance chief Jim Kavanaugh noted that AI now accounts for roughly 30% of consulting revenue and 35% of the consulting backlog, reflecting the firm’s shift toward a “services as software” model. The company expects full‑year free cash flow to rise by more than $1 billion, a slight upgrade from its July outlook, and projects constant‑currency revenue growth of 4%‑5% through 2026.

Analysts see the earnings as a mixed signal. Software revenue beat the $7.66 billion consensus, but consulting fell just short of expectations and its gross margin slipped to 27.4% from 28.9% in the prior quarter. Adjusted gross margin also missed the 59.1% StreetAccount forecast, landing at 58.5%. Despite the beat, IBM’s stock is down about 15% from its recent high, while the S‑P 500 has risen 13% this year. The company’s guidance of $32 billion in revenue for the full year aligns with current street estimates, suggesting investors will watch closely whether the AI‑driven strategy can sustain growth and improve margins in the months ahead.