Hedera and Stellar both target banks and enterprises, yet both just posted steep two-week losses that erased months of gains. One coin faces a harder technical battle to recover, and the difference comes down to moving averages, ETF appetite, and…
Hedera (CRYPTO: HBAR) has declined 16.8% over the past two weeks, bringing its price to around $0.077. Similarly, Stellar (CRYPTO: XLM) has dropped 13.4% and is trading at about $0.1698 as of October 24, 2026. Both cryptocurrencies hit their lowest points in the last month on October 23, with HBAR at $0.0757 and XLM at $0.1705, and XLM is now hovering just below that mark.
These losses are not limited to the past two weeks. HBAR is down 27.5% in 2026 and 86.5% from its all-time high, while XLM is down 14.3% this year and 80.6% from its peak. Both projects target banks and large enterprises, which raises the question: which one is likely to recover its early-October price first?
HBAR Needs a 22% Gain and XLM a 19% Gain to Recover
For HBAR to return to its October 11 price, it would need to rise 22.3%, as it closed at $0.0941 that day. XLM, on the other hand, needs a 19.5% increase to go back to its October 11 close of $0.203.
Currently, HBAR has a market cap of $3.41 billion, while Stellar’s stands at $5.98 billion. Both coins continue to increase their supply. HBAR’s circulating supply is approaching its maximum, as our Hedera analysis shows, while the Stellar Development Foundation is releasing XLM from its reserves. This means that buyers must absorb additional tokens just to keep the prices stable.
For HBAR to regain lost ground, it first needs to surpass $0.0817, its highest point on October 23—about 6.2% above its current trading price. The next hurdle is $0.0896, the peak reached on October 18. For XLM, the first target is $0.187, the October 21 high, about 10.2% higher than its current level.
However, XLM faces additional challenges. Analysts noted on October 22 that its recovery efforts stalled below key exponential moving averages—trend lines that prioritize recent prices—suggesting sellers are likely to intervene around those levels. Therefore, XLM’s first barrier appears to be more difficult than HBAR’s.
Hedera and Stellar Back the SEC’s Crypto Rule, but Both Kept Falling
Both Hedera and Stellar have supported a proposed SEC regulation on crypto assets—a draft open for public comment before a final vote. The HBAR Foundation has also asked the SEC to reiterate its March 2026 stance that HBAR should be classified as a digital commodity, which would subject it to commodity regulations.
Despite this backing, the market reactions were muted. HBAR fell from $0.0839 on October 21 to $0.0770 by October 24—a drop of 8.2%—while XLM slipped from $0.184 to $0.172. This suggests that traders largely dismissed the comments, making the anticipated SEC vote a crucial upcoming event.
Hedera’s ETF Buyers Have Gone Quiet Since IBM’s App Launch
Spot HBAR exchange-traded funds (ETFs), which directly hold the coin and trade like stocks, have seen total net inflows of $113.8 million as of October 23. However, recent activity has stalled, with the funds experiencing minimal new inflows in October and even a $559,000 outflow on October 16.
The total net assets in these funds dropped from $98.6 million on September 28 to $62.6 million on October 23—a decline of 36.5%. This drop has significantly affected the value of ETF investors’ holdings.
On September 28, IBM (NYSE: IBM | IBM Price Prediction) launched a Hedera-based identity application, which spiked HBAR’s price to $0.131 before it closed at $0.122. With HBAR’s governing council consisting of major global organizations, the coin has strong corporate ties. However, HBAR quickly retraced this gain, indicating that positive news often provides a short-term bump that fades quickly.
DTCC Gives Stellar a Dated Catalyst in 2027
The Depository Trust & Clearing Corporation (DTCC), which provides post-trade services for U.S. markets, announced plans on May 27 to bring DTC-custodied assets onto the Stellar network. This tokenization will convert assets such as stocks, ETFs, and Treasury bonds into digital tokens on a blockchain. The DTCC and the Stellar Development Foundation aim to have these assets on the Stellar platform by the first half of 2027.
However, the initial DTCC services will run on different networks, as our analysis of Stellar notes. Because Stellar transactions incur only minimal fees, XLM’s price could depend heavily on the trading volume these tokenized securities generate.
Which of HBAR and XLM Could Recover First? In conclusion, Stellar seems to have the clearer advantage for a potential recovery. XLM has dropped less over the past two weeks, has shown a smaller annual decline, and needs only a 19.5% rise to return to its October 11 closing price, while HBAR needs a 22.3% increase. Additionally, XLM has a longer-term catalyst in DTCC’s 2027 plans, while recent investment interest in HBAR ETFs has cooled.
XLM needs to close above $0.187 and regain its position above key moving averages, then push past $0.203 before revisiting its previous high of $0.237 from September 29. Meanwhile, HBAR must surpass $0.0817, then $0.0896 and eventually $0.0941. Ideally, renewed ETF inflows, similar to the $2.1 million seen on October 1, would support this. However, if XLM closes below its recent low of $0.1705, HBAR’s relatively stronger performance over the last 90 days—up 9.7% compared to XLM’s 5.7% decline—could give Hedera the edge in recovery.
Contact [email protected] for any questions or corrections.
Fifth Third Wealth Advisors LLC raised its holdings in International Business Machines Corporation (NYSE:IBM – Free Report) by 10.9% during the 3rd quarter, according to its most recent disclosure with the Securities and Exchange Commission (SEC). The institutional investor owned 33,726 shares of the technology company’s stock after purchasing an additional 3,319 shares during the period. Fifth Third Wealth Advisors LLC’s holdings in International Business Machines were worth $7,417,000 at the end of the most recent reporting period.
A number of other institutional investors have also modified their holdings of the company. Harborfront Financial Group LLC acquired a new position in shares of International Business Machines during the second quarter worth about $27,000. Hara Capital LLC bought a new position in shares of International Business Machines in the 2nd quarter worth about $28,000. Bare Financial Services Inc grew its holdings in shares of International Business Machines by 114.6% during the second quarter. Bare Financial Services Inc now owns 103 shares of the technology company’s stock valued at $29,000 after purchasing an additional 55 shares during the last quarter. Portus Wealth Advisors LLC acquired a new stake in International Business Machines in the first quarter worth $26,000. Finally, Caitlin John LLC bought a new stake in shares of International Business Machines during the second quarter valued at approximately $35,000. Institutional investors and hedge funds own 58.96% of the company’s stock.
International Business Machines Trading Up 0.6% Shares of NYSE IBM opened at $253.69 on Friday. The business has a fifty day simple moving average of $233.06 and a 200-day simple moving average of $243.70. The company has a market cap of $239.01 billion, a price-to-earnings ratio of 21.63, a P/E/G ratio of 2.42 and a beta of 0.73. International Business Machines Corporation has a 12 month low of $199.19 and a 12 month high of $332.46. The company has a quick ratio of 0.74, a current ratio of 0.85 and a debt-to-equity ratio of 1.57.
International Business Machines (NYSE:IBM – Get Free Report) last posted its quarterly earnings data on Wednesday, October 21st. The technology company reported $2.95 earnings per share (EPS) for the quarter, topping the consensus estimate of $2.85 by $0.10. International Business Machines had a return on equity of 34.37% and a net margin of 15.99%. The firm had revenue of $17.10 billion for the quarter, compared to the consensus estimate of $16.82 billion. During the same quarter in the previous year, the company earned $2.65 EPS. The business’s revenue for the quarter was up 4.7% compared to the same quarter last year. Sell-side analysts predict that International Business Machines Corporation will post 12.34 EPS for the current year. International Business Machines Dividend Announcement The firm also recently announced a quarterly dividend, which will be paid on Thursday, December 10th. Stockholders of record on Tuesday, November 10th will be given a $1.69 dividend. This represents a $6.76 annualized dividend and a dividend yield of 2.7%. The ex-dividend date of this dividend is Tuesday, November 10th. International Business Machines’s dividend payout ratio (DPR) is 57.63%.
Insider Buying and Selling at International Business Machines In other news, SVP Robert Thomas sold 25,000 shares of International Business Machines stock in a transaction on Wednesday, August 26th. The stock was sold at an average price of $230.32, for a total transaction of $5,758,000.00. Following the transaction, the senior vice president owned 47,800 shares in the company, valued at approximately $11,009,296. The trade was a 34.34% decrease in their ownership of the stock. The sale was disclosed in a filing with the SEC, which can be accessed through the SEC website. Corporate insiders own 0.27% of the company’s stock.
International Business Machines News Summary Here are the key news stories impacting International Business Machines this week:
Positive Sentiment: IBM reported third-quarter revenue of $17.1 billion, up 4.7% year over year, while adjusted EPS of $2.95 exceeded analyst expectations. Software growth accelerated to 9% at constant currency, infrastructure demand improved, and operating pretax margins expanded by 70 basis points. IBM Beats Q3 Earnings Estimates on Software, Infrastructure Growth Positive Sentiment: Management raised its full-year free-cash-flow outlook, supported by stronger software performance, Red Hat demand and enterprise AI activity. Transaction-processing revenue also rose 10%, suggesting improving demand in key recurring-revenue businesses. IBM: 3 Key Takeaways for Long-Term Investors Positive Sentiment: Several analysts raised their earnings estimates or price targets following the results. Erste Group increased its FY2027 EPS forecast to $13.40 from $13.13, while JPMorgan, RBC and Stifel reiterated positive ratings and lifted targets. IBM Analyst Estimates and Ratings Neutral Sentiment: IBM’s updated FY2026 revenue guidance of $70.2 billion to $70.9 billion broadly brackets the $70.4 billion consensus estimate. The outlook was not meaningfully raised, leaving investors focused on whether the software rebound can continue. Neutral Sentiment: IBM declared a quarterly dividend of $1.69 per share, or $6.76 annualized, reinforcing its appeal to income-oriented investors. A separate dividend-stock article highlighted IBM’s decades-long record of payout increases. IBM Declares $1.69 Dividend Negative Sentiment: Investors remain concerned that roughly half of the software growth benefited from the Confluent acquisition and that management’s unchanged revenue outlook implies slower growth later in the year. IBM’s comments that lower-cost, open-weight AI models can deliver comparable performance also raised questions about pricing power and AI monetization. Why Isn’t IBM’s Stock Bouncing Back After Strong Earnings Results? Negative Sentiment: Some analysts view IBM’s valuation as demanding relative to its modest underlying growth, while slower Consulting performance, debt and uncertainty over the durability of the software rebound could limit further upside. Analysts Set New Price Targets Several research firms have recently issued reports on IBM. BMO Capital Markets increased their price target on International Business Machines from $230.00 to $265.00 and gave the stock a “market perform” rating in a research note on Thursday. The Goldman Sachs Group reissued a “buy” rating and set a $300.00 target price on shares of International Business Machines in a research note on Thursday. Evercore dropped their price target on shares of International Business Machines from $310.00 to $250.00 and set an “outperform” rating on the stock in a research report on Thursday, July 16th. Citigroup increased their price objective on shares of International Business Machines from $245.00 to $280.00 and gave the company a “buy” rating in a report on Thursday. Finally, Jefferies Financial Group raised their price objective on shares of International Business Machines from $270.00 to $280.00 and gave the company a “buy” rating in a research note on Thursday. Twenty investment analysts have rated the stock with a Buy rating, twelve have assigned a Hold rating and two have assigned a Sell rating to the stock. According to data from MarketBeat, International Business Machines has an average rating of “Moderate Buy” and an average price target of $266.12.
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International Business Machines Corporation (NYSE:IBM), commonly known as IBM, is a global technology and consulting company that helps organizations modernize their information technology and business operations. Its offerings include hybrid cloud solutions, artificial intelligence software and services, enterprise software, IT infrastructure, cybersecurity, data analytics, and technology consulting.
IBM provides products and services to businesses, governments, and other institutions across industries and regions worldwide.
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Acquisitions consumed $11.4 billion through September, compared with $7.8 billion of free cash flow. Summary
Better software results strengthen cash generation, while acquisitions keep capital allocation in focus.
Enterprise software and consulting company IBM IBM edged down 0.87% to $249.91 at 10:29 a.m. ET Friday, with its latest earnings putting cash allocation in focus. Software growth has momentum. The spending bill is hefty, too: acquisitions consumed $11.4 billion through September, compared with $7.8 billion in free cash flow. Friday's Motley Fool review revisited the software performance, but investors also have a balance sheet to weigh.
IBM's quarterly results showed software revenue of $7.8 billion, up 9% at constant currencies, while consulting grew 2% on the same basis. Free cash flow reached $3 billion, rising $700 million from a year earlier. That covered $1.6 billion in dividends roughly 1.9 times, leaving $1.4 billion before acquisitions and other financing demands. Total debt, including financing debt, stood at $63.8 billion. The business is generating more cash. Management still has competing uses for it.
The GuruFocus snapshot shows a GF Score of 76/100 and a price-to-earnings ratio of 21.31, with profitability stronger than financial strength—a useful reminder that earnings quality and balance-sheet capacity deserve separate scrutiny. The next test is execution: acquisitions need to contribute, consulting needs to build momentum, and stronger software sales need to keep converting into cash. Growth gets attention. Funding it well determines how much shareholders keep.
Disclosures I/we have no positions in any stocks mentioned, and have no plans to buy any new positions in the stocks mentioned within the next 72 hours.
Before International Business Machines (IBM +0.26%) posted third-quarter results on Oct. 21, I set a bar for buying the stock. I wanted software revenue growth back in the high single digits and recurring revenue rising close to 10%.
The software half of that test came through. IBM's software segment reported 9% year-over-year revenue growth at constant currency (a measure that strips out exchange-rate moves). In the second quarter, it grew just 5%.
But shares barely budged on Thursday, the day after the report, closing up less than 1% after falling as much as 4% during the session. IBM stock closed at $252.11, which puts it about 23% under the $329.23 record close it set on June 2.
In September, I wrote that I expected IBM stock to be higher in five years but still wouldn't buy it. What I was waiting for was software growth that picked back up. I think this quarter delivered it.
Image source: Getty Images.
Software is growing faster againSoftware matters more to IBM's profits than any other piece of the business. The segment made up around 46% of third-quarter revenue but about 65% of the company's segment profit, so its swing this year counts for a lot.
Software's constant-currency growth was 8% in the first quarter of 2026. It cooled to 5% in the second quarter before jumping to 9% in the third -- its fastest rate of the year. Transaction processing, the software linked largely to IBM's mainframes, did most of the swinging. It dropped 9% at constant currency in the second quarter and climbed 10% in the third. Better still, software's segment profit rose 15% year over year to around $2.7 billion, and its margin widened to 35% from 33%.
"Software revenue growth accelerated four points sequentially to 9% this quarter, including over four points of organic growth," chief financial officer Jim Kavanaugh said on IBM's Oct. 21 earnings call.
Granted, some of the jump is timing. Kavanaugh said around a quarter of the acceleration came from big deals that slipped out of the second quarter and closed in the third. The other three-quarters, he said, came from new business.
I think this makes the second quarter look like the exception, not the start of a slide.
Does the unchanged revenue forecast matter?IBM still expects full-year revenue to climb 4% to 5% at constant currency, the same range it set in July. But it now expects 2026 free cash flow to rise by over $1 billion from last year's $14.7 billion. In July, it expected a gain of around $1 billion.
Kavanaugh said IBM ties its profit and cash flow plans to a 4% base case for revenue, and it kept that approach this quarter. Under that plan, IBM now expects software to grow about 7% to 8% this year, with 7% as the base case.
I don't think the unchanged revenue forecast takes much away from the software turn. Software carries most of IBM's profit, so a faster software business can raise cash flow even when total revenue growth stays in the same range. And third-quarter free cash flow climbed around 28% year over year to $3.0 billion.
Recurring revenue is the half of my test that hasn't shown up yet. IBM's annual recurring revenue, a yearly run-rate measure of its recurring software business, grew 8% to $24.9 billion, still below 10%. But Kavanaugh said he expects that growth to near double digits in the fourth quarter.
IBM International Business Machines$252.11+$0.65 (+0.26%)
NYSE · As of 4:00 PM ET 10/22/26
IBM stock looks reasonably priced againIBM's market value of around $235 billion is about 15 times free cash flow, based on what IBM now expects for this year. Shares also sell for about 19 times earnings using analysts' 2027 estimates. At the June record, the stock cost closer to 25 times earnings.
Thursday's flat finish might have been more about the run-up into the report. Shares rose around 8% over the three trading days before it, so part of the good news was arguably priced in already.
The risk is that recurring revenue might stay stuck near 8%, and that software's pace could slow when the slipped deals are behind it. But IBM pays a quarterly dividend of $1.69 a share, which yields around 2.7% at today's price, as investors wait to see what the fourth quarter holds.
In the end, software did what I needed it to do, and the stock price hasn't followed. I'd start buying IBM stock here, maybe in a few smaller purchases, and add more if recurring revenue gets closer to 10% in the fourth quarter.
International Business Machines Corporation delivers strong profitability and recurring software revenue, but organic growth remains modest, and competition is persistent. IBN's Q3 2026 saw revenue rise 5% to $17.1B and adjusted EPS up 11%, yet much of software growth was non-organic and investor sentiment remains cautious. Recurring software revenue approaches $24.9B, aided by Red Hat and recent acquisitions, but IBM trades at a premium with a forward PEG of 3.07.
In July, IBM (IBM +0.34%) stock suffered the worst day in its 115-year history, falling about 25% after the company warned that customers had shifted spending away from its products.
The miss was clearly a matter of timing -- a series of major contracts IBM was planning didn't close by the end of the quarter, as its customers shifted spending to memory and storage products whose prices were increasing rapidly.
Three months later, IBM's third-quarter report, which landed on Oct. 21, mostly backed that assessment up, and the company posted strong revenue and earnings. So, why isn't the stock bouncing back?
Image source: Getty Images.
The good news was realIBM's revenue rose 5% to $17.1 billion in the third quarter, up from 1% growth in the second. Software grew 9% at constant currency, and operating earnings per share rose 11% to $2.95. Free cash flow was $3 billion, and management raised its full-year outlook to FCF growth of more than $1 billion.
CFO Jim Kavanaugh said about two-thirds of the large software deals that slipped in the second quarter closed in the third. Transaction processing software, which is tied to mainframes, swung from a 9% decline to 10% growth. That looks like delayed spending, not lost customers.
IBM International Business Machines$252.32+$0.86 (+0.34%)
NYSE · As of 3:57 PM ET 10/22/26
Some of that growth was boughtIBM closed its roughly $11 billion acquisition of Confluent in March, so that revenue wasn't included in last year's numbers. Confluent's last reported quarterly revenue was $314.8 million, and IBM's software revenue in Q3 2025 was $7.2 billion. So that would put IBM's organic software growth in this quarter at around 4%. That's real progress, but it's less dramatic than 9%.
Management is also tapping the brakes. CEO Arvind Krishna said he doesn't expect transaction processing to keep growing at double digits, and IBM expects that business to be flat for the year. Kavanaugh said the company is expecting about $32 billion in full-year software revenue. Subtract the $22.6 billion IBM has recognized through nine months, and the fourth quarter works out to roughly 4% growth, versus 8% in the third. Mainframe hardware sales also fell 20%, although that came against a very strong launch a year ago.
IBM is a long-term buyI still like IBM as a long-term investment in AI and quantum computing, but I'm not ignoring the risks. IBM spent $11.4 billion on acquisitions this year, so cash fell $3.4 billion to $11.1 billion, and debt rose $2.6 billion to $63.8 billion. The dividend looks well covered -- IBM paid $4.8 billion of dividends against $7.8 billion of free cash flow through nine months -- but there's less cushion for another big deal. Meanwhile, shareholders receive a dividend yield of about 2.7%.
IBM isn't the kind of technology stock that's going to grab headlines like Nvidia or Palantir, but that doesn't mean investors should overlook it. The company has established itself as an important player in enterprise AI, while its hybrid cloud business and consulting operations provide opportunities for long-term growth.
There are challenges, particularly as businesses remain cautious about technology spending. But IBM has something many high-flying AI stocks don't -- an established customer base, consistent cash flow, and a reliable dividend.
That's why I remain bullish on Big Blue, despite the market’s muted reaction to its third-quarter report.
IBM's CEO calls it a triumph of disciplined execution and transformative AI, but the numbers behind that spin reveal a company that has fumbled nearly every major shift in tech for the past fifty years and keeps falling further behind.
Every quarter, IBM (NYSE: IBM) | IBM Price Prediction CEO Arvind Krishna says IBM is doing great. Every quarter, investors are reminded that what was the greatest American tech company for decades had its chance to stay great. Krishna and his immediate predecessors squandered that opportunity with a single-digit revenue increase and technology that lags virtually every one of its larger competitors.
As IBM released quarterly figures, Krishna commented, “Disciplined execution throughout the quarter drove accelerated revenue growth and strong free cash flow. Our clients are now deploying Super Intelligence in ways that transform entire operating models, instead of simply addressing narrow or novel problems. IBM’s technology and expertise are helping organizations drive growth and serve customers with greater speed, precision, and efficiency than ever before.” In reality, revenue rose a paltry 5% to $17.1 billion, dwarfed by companies like Microsoft (NASDAQ: MSFT), Meta (NASDAQ: META), and Alphabet (NASDAQ: GOOG). IBM’s net income for the quarter was $2.2 billion, up from $1.7 billion last year. Nvidia’s (NASDAQ: NVDA) net income in the last quarter was $60 billion.
In its most recent quarter, Microsoft had revenue of $90 billion. It had net earnings of $36 billion.
Going back to 1993, IBM was the fourth largest company in America, behind only GM, Ford, and ExxonMobil. It was ahead of GE, which is considered the best-run company in the second half of the last century. Last year, IBM ranked 66th, based on the Fortune 500.
Nothing tells Wall St.’s view of companies in the same sector as market cap. IBM’s is $237 billion. Microsoft’s is $4 trillion, and Alphabet’s is about the same.
What happened to IBM, really? It missed out on leading in PCs, smartphones, operating systems, cloud computing, AI, e-commerce, and search. In essence, it missed out on every major tech advance in the last half-century.
IBM will never be a tech leader again. In fact, it continues to fall behind.
Contact [email protected] for any questions or corrections.
HBAR needs a massive rally to reclaim a price level it held for weeks in mid-2025, but network activity is surging while the token keeps sliding. A specific chain of events must unfold in sequence before $0.25 becomes realistic again.
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Hedera (CRYPTO:HBAR) needs a 209.6% increase to return to $0.25, a level it last reached on September 19, 2025. Investors are particularly attentive to this threshold because HBAR held that level for several weeks in mid-2025, closing July 2025 at about $0.251.
However, HBAR’s price has moved downward. HBAR trades around $0.081, down 4.8% in 24 hours, 14.3% over the past two weeks, and 14.8% over the last month. Furthermore, it remains 85.8% below its all-time high of $0.57.
In October, HBAR has fluctuated between $0.107 and $0.080 and trades barely above this month’s low. This decline followed a surge to $0.131 in September. So, what would it take for HBAR to reach $0.25 again?
HBAR Needs an $11 Billion Market Cap to Hit $0.25
To understand HBAR’s price target, look at market capitalization, which is calculated by multiplying the coin’s price by the number of tokens in circulation. With a current market cap of about $3.56 billion, HBAR would need to rise to $0.25 to reach about $11 billion.
Unfortunately, the increasing supply of HBAR makes this challenge more daunting. Around 44 billion HBAR tokens are in circulation out of a maximum of 50 billion. This growing supply means reaching the same price level now requires significantly more buyer investment than when HBAR traded above $0.25 in 2021.
The difference in capitalization is evident. When HBAR neared $0.122 in late September, its market cap reached about $5.35 billion. At its $0.57 peak on September 15, 2021, today’s supply would carry an astounding market cap of about $25.1 billion.
Hedera’s Network Activity Jumped, but Fees Aren’t Driving HBAR Demand
Hedera is a public network that lets businesses record data, issue tokens, and process payments. Every transaction incurs a fee paid in HBAR, which Hedera sets at fixed U.S. dollar amounts. This fee structure generates much of the demand for HBAR.
In the past month, Hedera has seen a 168.4% increase in transactions, and the total value locked (TVL) in its apps has risen by 12.3% to $33.2 million. However, despite this growth, the HBAR price has declined. Since transaction fees are only a fraction of a cent, even a substantial uptick in activity fails to create significant buying pressure.
Additionally, on October 21, Hedera launched its Network MCP on testnet—a tool that lets AI agents suggest transactions like sending HBAR or creating tokens. However, a testnet is a practice network where tokens don’t carry market value, so this launch doesn’t yet boost demand for HBAR.
IBM Deals and an SEC Request Could Lift HBAR, but Past Gains Faded Fast
Hedera has partnered with IBM (NYSE:IBM | IBM Price Prediction) on its IDTrust project, integrated with the watsonx AI platform. IDTrust helps record identity credentials for AI agents via the Hedera Consensus Service. Hedera has also joined the UK’s Wholesale Digital Markets Champion Taskforce, and projects like HashPack and SODAX are working to improve access to tokenized assets on Hedera. Still, neither HashPack nor SODAX has revealed its fee structure.
While these enterprise announcements have occasionally driven up HBAR’s price, the increases have often been short-lived. For instance, HBAR surged 27% on September 28 after IBM released a Hedera-based identity app for its cloud, only to give back 16% the following day and close September 29 at around $0.102.
Recent regulatory developments could also provide upward momentum. On October 21, the HBAR Foundation, along with five other blockchain organizations, urged the SEC to formalize its March 2026 interpretation classifying their tokens as digital commodities under the proposed Regulation Crypto Assets rule. However, the SEC may choose to leave this interpretation as nonbinding guidance.
HBAR Needs Bitcoin’s Momentum for a Broader Crypto Rally
Bitcoin (CRYPTO:BTC) accounts for roughly 60% of the total crypto market value, meaning that smaller cryptocurrencies like HBAR often follow its trends. On October 21, Bitcoin bounced alongside a tech-stock rebound, but it then fell 2% over 24 hours to around $81,800 today.
However, HBAR has generally lagged Bitcoin during rallies and has fallen more sharply during selloffs. Over the last 90 days, Bitcoin rose 31.4%, while HBAR gained only 18.6%. Year-to-date, Bitcoin has decreased by 3.8%, while HBAR has dropped 20.9%.
Market sentiment is showing little upward or downward pressure. The Crypto Fear and Greed Index stands at a neutral 51.
Can HBAR Reach $0.25 Again? It seems unlikely that HBAR will reclaim the $0.25 mark by the end of 2027. Reaching this price would require a 209.6% increase, a market cap of about $11 billion, and transparency in fee revenue from Hedera’s partners. If HBAR fails to close above $0.10 by November 30 and partners remain tight-lipped about their fee structures, it may retrace further toward $0.074, where it closed in August.
For HBAR to realistically approach $0.25, several key developments need to unfold in order. First, HBAR must close above $0.10 each month, the end-of-November level highlighted in our October 17 analysis. It would then need to surpass the September high of $0.131. Additionally, partners like IBM would have to disclose transaction fee information, all while Bitcoin continues to rise and attract investment into altcoins.
Contact [email protected] for any questions or corrections.
Key Takeaways IBM's Software revenues grew 9% in the third quarter, with recurring revenue up 8% to $24.9 billion.IBM generated $7.8 billion in free cash flow through September, but Consulting revenues grew just 2%.IBM trades at 19.28X forward earnings versus its 17.3X five-year median, with debt reaching $63.8 billion.
International Business Machines Corporation (IBM - Free Report) is showing better software execution, stronger cash generation and improving profitability, but the stock already trades above its own longer-term valuation norm. That creates a more demanding setup for new buyers.
Recurring software revenues and AI-related opportunities support the growth case. Yet modest Consulting growth, elevated debt and mixed Zacks Style Scores suggest investors still have reasons to remain selective.
IBM Software Growth Strengthens the Bull CaseSoftware revenues increased 9% year over year at constant currency in the third quarter of 2026. Red Hat grew 11%, Data advanced 20% and Transaction Processing rebounded 10%. Annual recurring revenue rose 8% to $24.9 billion, adding durability to IBM's software-led strategy.
Management now expects Software revenues to grow 7%-8% in 2026, with double-digit Hybrid Cloud growth and mid-teens Data growth. The competitive backdrop remains intense. Microsoft Corporation (MSFT - Free Report) reported 43% growth in Azure and other cloud services in its fiscal fourth quarter of 2026, while Oracle Corporation (ORCL - Free Report) posted 120% constant-currency growth in cloud infrastructure revenues in its fiscal first quarter of 2027. Those results underscore the pace of enterprise cloud and AI investment IBM must keep addressing.
IBM's Cash Flow Offers Financial SupportIBM generated $7.8 billion of free cash flow through the first nine months of 2026, up $600 million year over year. Management raised its full-year expectation and now projects free cash flow growth of more than $1 billion from 2025.
That cash generation provides room to fund operations, dividends and strategic investment while absorbing acquisition-related demands. IBM returned $4.8 billion to shareholders through dividends during the first nine months and ended September with $11.1 billion in cash, restricted cash and marketable securities.
IBM Still Faces an AI Monetization ChallengeGenerative AI represented about 30% of Consulting revenues and 35% of Consulting backlog in the third quarter. The trailing 12-month book-to-bill ratio remained above 1.0, indicating continued demand for transformation work.
Revenue conversion remains less convincing. Consulting revenues grew only 2% at constant currency, and segment profit margin declined modestly as IBM reinvested productivity gains into digital assets and its Services-as-Software model. Management still expects low-to-mid-single-digit Consulting growth for 2026, making profitable conversion of the AI backlog an important test.
IBM's Premium Raises the Execution BarIBM trades at 19.28X forward 12-month earnings, above its five-year median of 17.3X. The multiple also stands well above the Zacks Computer - Integrated Systems sub-industry's 10.05X, leaving less valuation support if operating momentum weakens.
Balance-sheet demands add another consideration. Total debt reached $63.8 billion at the end of the third quarter, while IBM invested $11.4 billion in acquisitions during the first nine months. Trailing 12-month return on invested capital was 11%, below the 24% industry median, increasing the importance of successful integration and sustained margin improvement.
IBM's Style Signals Favor Patience Over AggressionThe investment case is improving, but the current valuation requires continued execution. Faster Software growth, recurring revenues and free cash flow support the fundamental picture, while Consulting monetization, leverage and capital efficiency limit the case for an aggressive entry at current multiples.
IBM currently carries a Zacks Rank #3 (Hold). Its Growth Score of C is better than its Value Score of D, while the Momentum Score of F and VGM Score of F indicate weaker characteristics across those measures. The combination points to a balanced setup rather than a broad quantitative signal favoring new purchases now.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Key Takeaways IBM shares rose 11.1% in three months, supported by 6% revenue growth and an 11% rise in operating EPS.Software revenues grew 9%, led by 11% Red Hat growth and 20% Data growth, while recurring revenue rose 8%.IBM trades at 19.3X forward earnings versus its 17.3X historical median.
International Business Machines Corporation (IBM - Free Report) shares have gained 11.1% in the past three months, putting the focus on whether better operating execution can support further upside.
The third quarter strengthened that case, with faster Software growth, improved transaction execution and wider operating margins. Still, uneven enterprise spending, mainframe cycles and a valuation above IBM's historical median keep the setup balanced.
IBM's Three-Month Gain Meets Stronger ExecutionIBM's third-quarter revenue growth accelerated to 6% at constant currency, while operating earnings per share increased 11% year over year. Operating pretax margin expanded 70 basis points, reflecting productivity actions and better execution across the portfolio.
The quarter also showed improvement in areas that had raised timing concerns earlier in the year. Transaction Processing grew 10% and Infrastructure advanced 5% at constant currency. Yet mainframe-related demand can be cyclical, so sustaining the stock's recent gain will require continued execution beyond a single quarter.
IBM Software Growth Adds Fundamental SupportSoftware revenues increased 9% at constant currency. Red Hat grew 11%, Data advanced 20% and annual recurring revenue climbed 8% to $24.9 billion, giving IBM a larger recurring-revenue base to support its software-led strategy.
The competitive backdrop remains demanding. Microsoft Corporation (MSFT - Free Report) reported 43% growth in Azure and other cloud services in its fiscal fourth quarter of 2026, showing the scale of enterprise cloud demand. Oracle Corporation (ORCL - Free Report) posted 120% constant-currency growth in cloud infrastructure revenues in its fiscal first quarter of 2027, highlighting the pace of AI-related infrastructure expansion.
IBM's Consulting AI Backlog Is Still a TestGenerative AI represented about 35% of IBM Consulting backlog and 30% of segment revenues in the third quarter. That points to meaningful enterprise engagement as clients modernize applications, data foundations and workflows for AI.
Monetization remains the key test. Consulting revenues rose only 2% at constant currency, and segment profit margin declined modestly as IBM reinvested productivity gains into digital assets. Faster revenue conversion and profitable delivery would make the AI backlog a more visible contributor to the growth story.
IBM Valuation Could Cap Further UpsideIBM trades at 19.3X forward 12-month earnings, above its five-year median of 17.3X. The multiple is also close to the Zacks Computer and Technology sector's 19.8X and the S&P 500's 19.5X.
That valuation leaves less room for execution setbacks. Software growth, Consulting acceleration and margin expansion will need to remain on track for the stock to justify a sustained premium to its own historical norm.
IBM's Mixed Style Scores Temper the SetupThe bottom line is that IBM's operating momentum has improved, but the stock's near-term setup is not uniformly favorable. Better Software growth, recurring revenues and margin execution support the fundamental case, while Consulting conversion, spending variability and valuation remain checks on further gains.
IBM currently carries a Zacks Rank #3 (Hold), which reflects a neutral short-term earnings-revision signal. Its Growth Score of C is stronger than its Value Score of D, while the Momentum Score of F and VGM Score of F indicate weaker characteristics on those style measures. The recent share-price advance therefore sits alongside a mixed Zacks style profile rather than a broad confirmation across the scoring framework.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Key Takeaways IBM's Q3 EPS rose 11% to $2.95, beating estimates by 2.4%, while revenues grew 4.7% to $17.10 billion.IBM's Software revenues grew 9%, fueled by 11% Red Hat growth and 20% Data growth, with margins expanding.IBM's Q3 free cash flow rose $700 million to $3 billion, prompting a stronger full-year cash-flow outlook.
International Business Machines Corporation (IBM - Free Report) delivered better-than-expected third-quarter 2026 results as Software growth accelerated, Infrastructure remained resilient and free cash flow improved. The quarter also showed that productivity actions are translating into higher operating profitability.
The stronger performance does not remove every concern. Consulting growth remains modest, IBM Z revenues fell against a difficult comparison and portfolio results continue to reflect different product cycles. Still, the quarter strengthened IBM's case for delivering its 2026 revenue, margin and cash-flow targets.
IBM's Q3 Beat Shows Better Operating ExecutionIBM reported operating earnings of $2.95 per share, up 11% year over year and 2.4% above the Zacks Consensus Estimate. Revenues totaled $17.10 billion, increasing 4.7% from the prior-year quarter and beating the consensus mark by 1.4%. At constant currency, total revenue growth was 6%.
Operating pretax margin expanded 70 basis points to 19.3%. IBM attributed the improvement to disciplined execution and accelerated productivity initiatives, including efficiencies across general and administrative functions and sales. Adjusted EBITDA increased 7% to $4.9 billion.
IBM Software Accelerates on Red Hat and DataSoftware revenues were $7.8 billion, up 9% at constant currency. Red Hat grew 11%, while Data advanced 20%. Transaction Processing increased 10%, reversing the softness seen in the second quarter as IBM closed delayed transactions and captured new business.
The recurring base also remained supportive. Annual recurring revenue increased 8% to $24.9 billion, while OpenShift annual recurring revenue growth accelerated to more than 30%. IBM said Software growth accelerated four percentage points sequentially, with more than four points of organic growth.
Management raised its confidence in the full-year Software outlook and now expects growth of about 7%-8% in 2026. It projects double-digit growth in Hybrid Cloud, mid-teens growth in Data and low-single-digit growth in Automation, while Transaction Processing is expected to be flat for the year.
IBM Infrastructure Adds Another Earnings DriverInfrastructure revenues reached $3.7 billion and rose 5% at constant currency. Distributed Infrastructure surged 32%, supported by storage and power demand, while Hybrid Infrastructure advanced 9%.
IBM Z revenues declined 19% at constant currency against a difficult comparison, but management said the z17 program remains more than $1 billion ahead of the prior generation on a program-to-date basis. The quarter also included IBM Z's strongest midrange launch in nearly two decades.
Infrastructure segment profit margin expanded 120 basis points, showing that the business contributed to earnings even with the year-over-year decline in IBM Z revenues. IBM also exited the quarter with a sizable Distributed Infrastructure backlog, which management said supports fourth-quarter momentum.
IBM Raises the Stakes With Stronger Cash FlowFree cash flow was $3.0 billion in the third quarter, up $700 million year over year. For the first nine months of 2026, free cash flow reached $7.8 billion, an increase of $600 million, or 8%, from the prior-year period.
IBM consequently raised its full-year expectation and now forecasts free cash flow growth of more than $1 billion year over year. The company also continues to expect 100 basis points of operating pretax margin expansion for 2026. Higher adjusted EBITDA is expected to drive cash-flow growth, partly offset by higher capital expenditures, cash taxes and net interest expense.
IBM's Ratings Keep the Q3 Read-Through BalancedThe quarter improved IBM's operating picture, but the stock's quantitative signals remain mixed. IBM currently carries a Zacks Rank #3 (Hold), which points to a neutral near-term earnings-revision setup rather than a clear bullish signal.
The Growth Score of C offers some support, but the Value Score of D, Momentum Score of F and VGM Score of F temper the read-through from the earnings beat. Investors now have stronger Software growth, margin expansion and cash generation to weigh against modest Consulting growth, infrastructure cyclicality and an uneven overall Style Score profile.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Cantor Fitzgerald Investment Advisors L.P. increased its holdings in shares of International Business Machines Corporation (NYSE:IBM – Free Report) by 93.1% in the 3rd quarter, according to its most recent filing with the SEC. The fund owned 80,802 shares of the technology company’s stock after purchasing an additional 38,962 shares during the period. Cantor Fitzgerald Investment Advisors L.P.’s holdings in International Business Machines were worth $17,771,000 at the end of the most recent reporting period.
Several other hedge funds have also recently added to or reduced their stakes in the business. BlackRock Inc. bought a new stake in shares of International Business Machines in the second quarter valued at approximately $21,586,659,000. State Street Corp increased its position in International Business Machines by 2.7% during the second quarter. State Street Corp now owns 56,045,055 shares of the technology company’s stock worth $15,760,430,000 after acquiring an additional 1,450,562 shares during the period. Bank of America Corp DE increased its position in International Business Machines by 7.0% during the first quarter. Bank of America Corp DE now owns 16,063,653 shares of the technology company’s stock worth $3,893,669,000 after acquiring an additional 1,049,602 shares during the period. Bank of New York Mellon Corp acquired a new position in International Business Machines during the 2nd quarter valued at $2,606,782,000. Finally, UBS AM a distinct business unit of UBS ASSET MANAGEMENT AMERICAS LLC boosted its holdings in International Business Machines by 0.7% in the 2nd quarter. UBS AM a distinct business unit of UBS ASSET MANAGEMENT AMERICAS LLC now owns 7,621,512 shares of the technology company’s stock valued at $2,143,245,000 after purchasing an additional 53,388 shares during the period. Institutional investors own 58.96% of the company’s stock.
International Business Machines Price Performance NYSE:IBM opened at $250.67 on Thursday. The company has a 50-day moving average of $232.36 and a 200-day moving average of $243.60. The company has a market capitalization of $236.16 billion, a price-to-earnings ratio of 22.24, a PEG ratio of 2.32 and a beta of 0.73. International Business Machines Corporation has a 52 week low of $199.19 and a 52 week high of $332.46. The company has a debt-to-equity ratio of 1.63, a quick ratio of 0.74 and a current ratio of 0.79.
International Business Machines (NYSE:IBM – Get Free Report) last posted its earnings results on Wednesday, October 21st. The technology company reported $2.95 earnings per share for the quarter, beating analysts’ consensus estimates of $2.85 by $0.10. International Business Machines had a net margin of 15.52% and a return on equity of 35.65%. The business had revenue of $17.10 billion for the quarter, compared to analysts’ expectations of $16.82 billion. During the same quarter in the previous year, the firm posted $2.65 earnings per share. The firm’s revenue for the quarter was up 4.7% on a year-over-year basis. As a group, equities research analysts anticipate that International Business Machines Corporation will post 12.34 earnings per share for the current fiscal year. Analysts Set New Price Targets Several analysts have issued reports on the stock. Craig Hallum began coverage on shares of International Business Machines in a research report on Wednesday, August 19th. They issued a “buy” rating on the stock. Citic Securities upped their price objective on shares of International Business Machines from $294.00 to $297.00 and gave the company a “buy” rating in a research report on Wednesday, July 29th. Robert W. Baird assumed coverage on shares of International Business Machines in a research note on Tuesday, July 21st. They issued a “neutral” rating and a $230.00 target price for the company. Morgan Stanley lifted their target price on International Business Machines from $190.00 to $238.00 and gave the stock an “equal weight” rating in a research report on Thursday, October 15th. Finally, Jefferies Financial Group lowered their price target on International Business Machines from $320.00 to $260.00 and set a “buy” rating on the stock in a research note on Tuesday, July 21st. Twenty analysts have rated the stock with a Buy rating, twelve have assigned a Hold rating and two have given a Sell rating to the company. According to data from MarketBeat, the stock has a consensus rating of “Moderate Buy” and an average price target of $255.76.
Check Out Our Latest Research Report on IBM
Insiders Place Their Bets In other International Business Machines news, SVP Robert Thomas sold 25,000 shares of International Business Machines stock in a transaction that occurred on Wednesday, August 26th. The stock was sold at an average price of $230.32, for a total transaction of $5,758,000.00. Following the sale, the senior vice president directly owned 47,800 shares of the company’s stock, valued at approximately $11,009,296. The trade was a 34.34% decrease in their ownership of the stock. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which can be accessed through this link. Insiders own 0.27% of the company’s stock.
Key Headlines Impacting International Business Machines Here are the key news stories impacting International Business Machines this week:
Positive Sentiment: Q3 results exceeded expectations: IBM reported adjusted earnings of $2.95 per share versus consensus estimates near $2.85-$2.88, while revenue rose approximately 5% year over year to $17.1 billion, ahead of the roughly $16.8 billion forecast. IBM beats on top and bottom lines Positive Sentiment: Software and infrastructure growth accelerated: Software revenue increased 8% to $7.8 billion and Infrastructure revenue rose 4% to $3.7 billion. Management said previously delayed infrastructure deals began closing, supporting the view that the prior-quarter slowdown was temporary. IBM raises annual software revenue outlook Positive Sentiment: Cash-flow outlook improved: IBM generated $3.0 billion in free cash flow during the quarter and expects full-year free cash flow to increase by more than $1 billion from the prior year. The company maintained its 4%-5% full-year constant-currency revenue-growth forecast. IBM third-quarter results Positive Sentiment: CEO Arvind Krishna highlighted momentum in enterprise AI and “Super Intelligence” initiatives, while IBM’s partnerships around open-source AI inference and its quantum-computing strategy add longer-term growth catalysts. Neutral Sentiment: IBM’s GAAP net income rose to $2.19 billion from $1.74 billion a year earlier, and the board declared a quarterly dividend of $1.69 per share. Negative Sentiment: Gross margin was narrower than expected, which could limit the benefit of revenue growth if elevated AI, infrastructure, or implementation costs persist. (Free Report)
International Business Machines Corporation (NYSE:IBM), commonly known as IBM, is a global technology and consulting company that helps organizations modernize their information technology and business operations. Its offerings include hybrid cloud solutions, artificial intelligence software and services, enterprise software, IT infrastructure, cybersecurity, data analytics, and technology consulting.
IBM provides products and services to businesses, governments, and other institutions across industries and regions worldwide.
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ARMONK, N.Y., Oct. 22, 2026 /PRNewswire/ -- As Formula 1 returns to Austin's Circuit of the Americas for this weekend's United States Grand Prix, IBM (NYSE: IBM) and Scuderia Ferrari HP are introducing new AI-powered features to the Scuderia Ferrari mobile app.
IBM's CEO just raised a red flag about AI spending that rattled investors and rippled through the entire tech sector, even as the company posted a clean earnings beat. The question is whether his warning signals a broader shift in…
A quarter that topped Wall Street forecasts on revenue and adjusted earnings is drawing sellers into International Business Machines (NYSE:IBM | IBM Price Prediction), as an unchanged full-year outlook and pointed artificial intelligence (AI) commentary from the chief executive set the tone. IBM stock is down 7% to $233.50 in morning trading.
Today’s selling pressure is powerful in the technology sector. The SPDR S&P 500 ETF Trust (NYSEARCA:SPY) is down 0.9% on AI spending worries, while the iShares U.S. Technology ETF (NYSEARCA:IYW) is down 2%.
Chief executive Arvind Krishna delivered that commentary after IBM reported third-quarter 2026 results on October 21. The company sells the software, mainframes and consulting companies use to implement AI, so his caution reaches across information technology services.
Earnings Beat Collides With an Unchanged Revenue Forecast IBM’s Q3 2026 revenue reached $17.1 billion, ahead of the $16.84 billion estimate. The company’s adjusted earnings per share (EPS) of $2.95 also topped the $2.87 consensus.
Software revenue at IBM rose 8% to $7.8 billion, accelerating from the prior quarter on 11% growth at Red Hat. That strength didn’t change the full-year view, as IBM kept its constant-currency revenue growth forecast at 4% to 5%. The unchanged forecast disappointed investors who had hoped for an increase.
Krishna Flags AI Spending With No Real Return On IBM’s conference call, Krishna stated that enterprise customers are becoming “a lot more cognizant and a lot more aware of what is the true ROI of all of their AI spend.” Clients are also nervous about “some of the AI spending completely out of control with no real return,” he added.
Krishna framed that shift as an opening, since clients want help redesigning workflows and controlling token spending: “That is the tailwind for us.” The steep drop in IBM stock signals that the warning is driving the reaction.
IBM’s chief executive also recommended companies to “pick a few” AI initiatives and scale them, warning against running “100 little experiments” that never get enough investment. Riding an AI mania is fine as long as you plan the exit, something we covered in a free handbook on both halves of the trade.
Mainframe revenue from IBM Z fell 20% as the product cycle matured, while quarterly free cash flow reached $3.03 billion and management raised its full-year target for that metric to an increase of more than $1 billion. IBM’s consulting business grew just 0.2%, a soft spot close to the work Krishna described.
Accenture and Infosys Post Milder Declines Meanwhile, Accenture (NYSE:ACN) shares are down 0.5% to $239, a far smaller drop than IBM’s. Infosys (NYSE:INFY) stock is down 2% to $12.44, steeper than Accenture but well short of the slide in IBM stock.
Both of these companies sell the consulting work Krishna described. So, their softer declines suggest that the damage is mostly contained to IBM stock.
IBM’s Software Outlook Faces Its Next Test IBM’s fourth-quarter results will test its software growth. Management expects full-year software expansion of 7% to 8%, with 7% as its revised base case, and double-digit Red Hat gains in the fourth quarter.
IBM beat on both lines, accelerated software growth and raised its cash flow goal. Against that are an unchanged revenue forecast, a shrinking mainframe line and total debt of $63.8 billion, up $2.6 billion year to date. Investors considering IBM stock exposure should size their positions carefully given that mix.
Contact [email protected] for any questions or corrections.
IBM's software division just delivered a quarter that silenced critics who called the July stumble a warning sign, but the real test has nothing to do with last quarter's numbers and everything to do with what Red Hat does next.
IBM (NYSE:IBM | IBM Price Prediction) closed the regular session on October 21 at $251.46, up 3.94%. It then released third-quarter results that sent shares up as much as 6% after hours.
Revenue came in at $17.1 billion against expectations of $16.82 billion. Adjusted EPS of $2.95 exceeded the $2.86 estimate, and the earnings release filed with the SEC shows free cash flow rising to $3.03 billion.
The beat follows a rough July. Software deals slid that quarter, and EPS came in at $2.93, missing the $2.97 estimate. In an interview after this week’s report, Chief Executive Arvind Krishna said that stumble came down to timing. He declined to promise more than IBM can deliver.
The share price data points in two directions. The stock gained 10.35% in the week before the report but is still down 13.38% year to date. You have to decide whether this quarter marks the start of a recovery. Or it marks the end of a relief rally that has already played out.
Software Rebounded, and Most of It Was New Business
Software revenue rose 8.2% to $7.804 billion, with Data up 19%. IBM closed two-thirds of the deals that slipped out of the second quarter. Chief Financial Officer Jim Kavanaugh said on the call that about a quarter of the software acceleration came from those deals. He put the other three-quarters down to net new business.
The slid deals will not repeat. Transaction processing, the mainframe software line, grew 10%, and Kavanaugh said he expects that pace to moderate in the fourth quarter.
The net new portion is the bigger share. Annual recurring revenue grew 8% to $24.9 billion, which gives the fourth quarter a stronger floor than July suggested.
Red Hat’s Big Swing Still Averages Out to Flat
Red Hat is IBM’s highest-quality growth engine and the core of its hybrid cloud and AI pitch. OpenShift is now a $2.4 billion annual recurring revenue business growing over 30%.
Krishna said Red Hat growth moved from minus 7% last quarter to plus 10% this quarter. He acknowledged that averaging out the two gives flat to slight growth.
He still expects double-digit growth to continue. Red Hat bookings growth climbed back to the high teens, and bookings usually turn into revenue over the following quarters.
The fourth-quarter report will test that forecast. A single-digit Red Hat quarter would undermine the credibility Krishna says he is rebuilding.
Guiding Low Keeps the Bar Within Reach
IBM kept fiscal 2026 revenue growth guidance at 4% to 5% and raised its free cash flow outlook, as its third-quarter earnings materials show.
Krishna spoke. He said: “I want to give numbers on which we have extremely high confidence and not lean in because we’ve got to rebuild. Credibility is the way I would put it.”
A lower bar makes beats easier, but a 4% to 5% growth range also shows that IBM is still a slow grower. Consulting is the main drag, with revenue up just 0.2%.
Cash makes a stronger case. Operating pre-tax margin expanded 70 bps to 19.3%, and the board declared a $1.69 quarterly dividend, extending a payment record that goes back to 1916. That kind of streak is rare. We ranked ten of the longest-running dividend growers by valuation in a free Dividend Kings report.
Quantum Comes Free With the Shares
Krishna said: “I don’t think any of our quantum prowess is priced into the stock. I’m pretty convinced that we are actually ahead on that.”
If quantum isn’t priced in, today’s valuation rests on cash flows from software, consulting and infrastructure, and quantum then works like an option you hold at no extra cost.
IBM has evidence to support its claim of being ahead. It cited three independent demonstrations of quantum advantage on its hardware in July and its selection for Stage C of DARPA’s quantum benchmarking initiative. It also cited 16 enterprise deals this year.
However, IBM has not disclosed a quantum revenue figure, and commercial timelines remain uncertain. Its Quantum Day on December 10 is the next checkpoint.
What IBM’s Fourth Quarter Has to Prove
IBM’s investment case rests on steady cash flow with AI exposure. Software is growing faster than the company as a whole, the free cash flow outlook went up, and the guidance looks beatable.
Timing is the main concern. After IBM beat estimates in the first quarter, shares fell 8.25% on the day, so the after-hours gain could fade.
Deals could slide again, consulting is flat, and hyperscalers are competing for the same enterprise AI budgets, and a Red Hat miss would make all three worse.
IBM combines a dividend record going back decades with a share price still down 13.38% this year. If Red Hat posts double-digit growth again in the fourth quarter, the case gets much stronger.
Contact [email protected] for any questions or corrections.
IBM (IBM.N) shares fell 6.5% in premarket trading on Thursday, as analysts said part of the company's third-quarter software rebound was driven by deals delayed from the previous quarter, raising questions about how sustainable the boost would be.
Here are more details:
About $250 million of IBM's software growth in the quarter came from deals pushed out of the second quarter, and the improvement was more modest without them, BofA Global Research analysts said
IBM now expects annual software revenue growth of about 7% to 8%, up from 6% to 8%, but kept its overall revenue growth forecast unchanged
Third-quarter revenue in IBM's transaction processing unit, which sells software tied to its mainframe computers, grew 9%, though CEO Arvind Krishna said he doesn't expect that pace to continue and sees a more "normalized performance, especially going into next year"
The rebound follows a decline in the unit in the second quarter, when weakness in IBM's mainframe hardware and transaction processing software cut more than five points from its growth, finance chief James Kavanaugh said at the time
Bernstein said IBM's forecast suggests sales in the unit will dip slightly in the fourth quarter as the lift from the delayed deals wears off
The stock had fallen about 15% this year through Wednesday's close, including its steepest one-day drop in over a century in July after CEO Arvind Krishna said IBM had “faltered” in adapting to a shift in customer spending
If current losses hold, IBM is set to lose more than $15 billion in market value
At least 8 brokerages have raised their price targets on the stock, according to data compiled by LSEG.
International Business Machines Corp (NYSE:IBM) maintained its full-year revenue growth and free cash flow targets after first-quarter software strength helped expand margins and lift cash generation.
Revenue rose 1% year-on-year to $14.5 billion in the three months to March, increasing 2% after adjusting for currency movements.
Software revenue increased 7% to $6.3 billion, or 9% at constant currency, supported by growth in hybrid cloud, automation and data products.
The software division's hybrid cloud revenue rose 12%, while automation grew 14% and data increased 5%, highlighting the strength of IBM's core software operations.
Gross profit margin under generally accepted accounting principles (GAAP) increased 170 basis points to 55.2%, while the adjusted operating margin rose 190 basis points to 56.6%.
Free cash flow, which measures cash available after capital expenditure, increased to $2 billion from $1.9 billion a year earlier, while net cash from operating activities reached $4.4 billion.
IBM maintained its full-year expectation for revenue growth of at least 5% at constant currency and free cash flow of about $13.5 billion.
The group expects second-quarter revenue to range between $16.4 billion and $16.75 billion, with currency movements forecast to provide a tailwind of around one to one-and-a-half percentage points to full-year growth.
Consulting revenue declined 2% to $5.1 billion, although the figure was flat after adjusting for currency movements, while infrastructure revenue fell 6% to $2.9 billion.
Infrastructure weakness reflected a 15% decline in IBM Z revenue, the group's mainframe computing business, while distributed infrastructure revenue fell 5%.
Net income from continuing operations dropped 33% to $1.1 billion, compared with $1.6 billion a year earlier, when a tax benefit boosted the previous period's result.
Diluted earnings per share from continuing operations fell to $1.12 from $1.69, while adjusted operating earnings per share declined 5% to $1.60.
IBM returned $1.5 billion to shareholders through dividends during the quarter and invested $7.1 billion in acquisitions, including the purchase of HashiCorp.
The group ended March with $17.6 billion in cash, restricted cash and marketable securities, while total debt rose to $63.3 billion from the end of 2024.
Despite the earnings, shares of IBM were down around 7.5% in premarket trading on Thursday.
Key Takeaways IBM's Q3 adjusted earnings rose 11% to $2.95 per share, while revenues increased 4.7% to $17.10 billion.Software revenues grew 8.2%, fueled by Hybrid Cloud growth, Data strength and delayed transaction closures.IBM raised its 2026 free cash flow growth outlook to over $1 billion, backed by productivity improvements.
International Business Machines Corporation (IBM - Free Report) reported strong third-quarter 2026 results, with adjusted earnings rising 11% year over year to $2.95 per share. The figure beat the Zacks Consensus Estimate of $2.88 by 2.4%. Revenues increased 4.7% to $17.10 billion, surpassing the consensus mark of $16.87 billion by 1.4%.
The upside reflected accelerating Software and Infrastructure growth, improved transaction execution and productivity initiatives. Software annual recurring revenue (ARR) reached $24.9 billion, up 8% year over year. Operating pre-tax margin expanded 70 basis points (bps).
Software Growth Accelerates on Deal ClosuresSoftware revenues increased 8.2% year over year to $7.80 billion, up 8.7% at constant currency. Hybrid Cloud revenues grew 11%, supported by Red Hat, while Data jumped 20% at constant currency, benefiting from Confluent's performance. Automation declined 3% amid a challenging comparison.
Transaction Processing rebounded sharply, growing 10% at constant currency after a soft prior quarter. Management attributed the recovery to renewed demand and the closure of approximately two-thirds of large transactions delayed from the second quarter. These deferred deals contributed roughly one-quarter of the sequential Software growth acceleration.
Red Hat bookings growth accelerated to the high teens, while OpenShift ARR surpassed $2.4 billion, increasing more than 30%. Software segment profit climbed 15.2% to $2.73 billion, lifting margin 210 bps to 35%.
Infrastructure Benefits From Storage DemandInfrastructure revenues rose 4.2% year over year to $3.71 billion, representing 4.9% growth at constant currency. Hybrid Infrastructure advanced 9% at constant currency, driven by 32% growth in Distributed Infrastructure, reflecting broad-based strength in storage and Power systems.
IBM Z revenues declined 19% at constant currency against a demanding year-ago comparison. Nevertheless, the z17 program generated more than $1 billion in incremental revenues compared with the previous generation over six quarters. New midrange systems also delivered the platform's strongest midrange revenue launch in nearly two decades.
Infrastructure segment profit increased 11% to $715 million, while margin expanded 120 bps to 19.3%, aided by productivity initiatives.
Consulting Business Sees Modest ImprovementConsulting revenues were nearly flat year over year at $5.34 billion, increasing 1.8% at constant currency. Strategy and Technology grew 4% at constant currency, supported by application modernization and data and AI transformation demand. Intelligent Operations remained flat on a constant-currency basis.
Generative AI accounted for approximately 30% of quarterly Consulting revenues and 35% of backlog. Consulting signings totaled $5 billion, declining 2% at constant currency, while the trailing 12-month book-to-bill ratio was 1.04.
Segment profit declined 4.8% to $653 million, with margin contracting around 60 bps to 12.2% as IBM reinvested productivity savings into digital capabilities.
Profitability Expands Despite Cost PressureIBM's non-GAAP gross profit rose 4% to $10 billion, although gross margin contracted 20 bps to 58.5%. Operating expenses and other income totaled $6.71 billion, declining roughly 2% year over year.
Non-GAAP pre-tax income increased 9% to $3.30 billion, while adjusted EBITDA rose 7% to $4.9 billion. Adjusted EBITDA margin improved approximately 60 bps to 28.7%, reflecting operational efficiencies across general administration, sales and software development.
Strong Cash Flow and LiquidityIBM generated $4.03 billion in operating cash flow during the quarter compared with $3.08 billion a year earlier. Free cash flow increased $0.7 billion to $3 billion. For the first nine months, free cash flow reached $7.8 billion, up $0.6 billion year over year.
The company exited the September quarter with $11.1 billion in cash, restricted cash and marketable securities. Total debt was $63.8 billion, including $12.7 billion attributable to IBM Financing. Quarterly dividend payments totaled approximately $1.6 billion.
OutlookIBM reaffirmed its full-year 2026 constant-currency revenue growth expectation of 4% to 5%. However, management raised its free cash flow outlook, now anticipating an increase exceeding $1 billion year over year.
Software revenues are projected to grow 7% to 8%, supported by double-digit Hybrid Cloud growth and mid-teens Data expansion. Transaction Processing is now expected to remain flat for the year, an improvement from previous expectations.
Infrastructure revenues are forecast to grow in the low single digits, while Consulting growth is expected to accelerate to the low-to-mid-single-digit range. IBM also maintained its target of 100 bps operating pre-tax margin expansion for 2026, supported by continued productivity improvements.
Zacks RankIBM currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Upcoming ReleasesArista Networks Inc. (ANET - Free Report) is scheduled to release third-quarter 2026 earnings on Nov. 3. The Zacks Consensus Estimate for earnings is pegged at $1.08 per share, suggesting growth of 44% from the year-ago reported figure.
Arista has a long-term earnings growth expectation of 22.8%. Arista delivered an average earnings surprise of 8.9% in the last four reported quarters.
Akamai Technologies, Inc. (AKAM - Free Report) is slated to release third-quarter 2026 earnings on Nov. 5. The Zacks Consensus Estimate for earnings is pegged at $1.67 per share, indicating a 10.2% decline from the year-ago reported figure.
Akamai has a long-term earnings growth expectation of 5.9%. Akamai delivered an average earnings surprise of 4.8% in the last four reported quarters.
GLOBALFOUNDRIES Inc. (GFS - Free Report) is set to release third-quarter 2026 earnings on Nov. 4. The Zacks Consensus Estimate for earnings is pegged at 51 cents per share, implying a rise of 24.4% from the year-ago reported figure.
GLOBALFOUNDRIES has a long-term earnings growth expectation of 21.2%. GFS delivered an average earnings surprise of 10.9% in the last four reported quarters.
Key Takeaways NetApp and IBM benefit from rising AI and hybrid cloud demand, but differ in growth, valuation and momentum.NTAP shares gained 32.2% in three months versus IBM's 22.6%, while trading at a higher forward P/E of 25.NetApp's fiscal 2027 earnings estimates rose 11.42% in 60 days, while IBM's earnings estimates declined.
NetApp, Inc. (NTAP - Free Report) and International Business Machines Corporation (IBM - Free Report) are prominent players in the enterprise storage market, benefiting from rising demand for AI, hybrid cloud infrastructure and data modernization. As enterprises increasingly deploy AI-driven applications and manage growing volumes of data, the need for high-performance, scalable and secure storage solutions continues to expand. Both companies are strengthening their storage portfolios to capitalize on these trends, making them attractive investment options in the evolving enterprise infrastructure market.
NetApp is gaining traction through its all-flash storage solutions, cloud storage services and AI-ready data infrastructure, supported by strong customer demand and expanding adoption across enterprise workloads. Meanwhile, IBM is leveraging its diversified infrastructure portfolio, including Flash, Fusion, Tape and IBM Z storage, to address growing enterprise data requirements and support AI workloads. While NetApp's focused storage strategy and strong growth momentum offer opportunities, IBM's broad technology portfolio and established enterprise relationships provide competitive advantages.
Against this backdrop, which of these two enterprise storage stocks, NTAP or IBM, presents a better investment opportunity?
The Case for NTAPNetApp is benefiting from strong demand for AI-ready data infrastructure and enterprise storage modernization. As organizations move AI projects from experimentation to production, NetApp is seeing increased demand for high-performance, secure and scalable storage solutions. Its unified platform enables customers to prepare and access data for AI without moving it across environments, while maintaining governance and cybersecurity. During the first quarter of fiscal 2027, the company secured approximately 350 AI and data lake modernization deals, with deal sizes increasing as customers expanded deployments into production. Broad-based demand across industries, geographies and customer segments, along with new customer wins and deeper existing relationships, supports its growth prospects.
Strong adoption of all-flash storage and cloud services is supporting NetApp’s growth. All-flash array revenue surged 47% year over year to $1.31 billion in the first quarter of fiscal 2027, driven by demand for mission-critical workloads, including GPU-intensive AI applications. Public cloud revenue increased 28% to $206 million, reflecting solid adoption of first-party and marketplace storage services. The company is also benefiting from VMware workload migrations and cloud modernization through Amazon FSx for NetApp ONTAP and Azure NetApp Files. Meanwhile, its Keystone storage-as-a-service offering continues to gain traction, while growing interest in hybrid-flash solutions allows NetApp to address customers' varying performance, capacity and budget requirements.
Strategic acquisitions are expanding NetApp’s capabilities across AI and cloud environments. The acquisition of DataPelago strengthens the company's AI data infrastructure portfolio through its Nucleus software engine, which supports high-performance, in-place data processing and reduces costly data movement. This technology can help customers accelerate AI readiness and unlock greater value from existing data assets. Additionally, JetStream, acquired at the start of the second quarter, enhances NetApp's cloud disaster recovery capabilities for VMware environments, enabling continuous protection and recovery across different storage platforms. These acquisitions complement the existing portfolio, strengthen the company's competitive position and create opportunities to expand its presence in AI analytics, inference and cloud migration.
NetApp’s strong financial performance and raised fiscal 2027 guidance reflect improving business momentum. First-quarter revenues increased 30% year over year to $2.03 billion, while non-GAAP earnings per share climbed 66% to $2.58. Operating margin reached 31.9%, highlighting the company's ability to convert revenue growth into higher profitability. NetApp generated $401 million in free cash flow and returned $302 million to shareholders through share repurchases and dividends. Reflecting strong demand, pricing actions and disciplined execution, the company raised its fiscal 2027 revenue guidance to $7.98-$8.23 billion, with the midpoint of $8.1 billion indicating 17% year-over-year growth. It also raised its non-GAAP EPS outlook to $9.73-$10.03, signaling confidence in continued earnings growth.
However, rising component costs remain a concern for the company’s profitability. Product gross margin declined 150 basis points (bps) sequentially to 54.6% in the first quarter of fiscal 2027, primarily due to higher component costs, although improved pricing provided a partial offset. Overall non-GAAP gross margin fell 50 bps year over year to 70.6%, partly reflecting a higher contribution from product revenue. NetApp expects second-quarter gross margin to decline to 67-68%, primarily because of an increased product revenue mix. While pricing actions and improved execution are helping the company recover additional costs, continued component price inflation and the timing of cost recovery could weigh on margins.
The Case for IBMIBM is gaining from accelerating demand across its software, infrastructure and consulting businesses, supported by enterprise investments in AI, hybrid cloud and application modernization. In the third quarter of 2026, revenue growth accelerated to 6%, led by 9% growth in Software and 5% growth in Infrastructure, alongside modest improvement in Consulting. Red Hat revenue increased 11%, with bookings growth returning to the high teens, while OpenShift ARR growth accelerated to more than 30%. Data revenue grew 20%, supported by Confluent, and Transaction Processing revenue increased 10%, reflecting demand for mission-critical mainframe software. These results highlight the strength and diversity of IBM’s portfolio and continued client demand for its technology platforms.
The company is benefiting from growing enterprise demand for AI-related software, real-time data management and hybrid cloud solutions. Its integrated portfolio includes Confluent for real-time data, watsonx for AI-driven software development and agent orchestration, HashiCorp and Apptio for identity, policy and cost management, and Red Hat for open hybrid cloud architecture. Confluent’s capabilities help make enterprise data available to AI applications, while the planned Streamhouse capabilities are expected to support cross-selling and upselling opportunities. IBM is also advancing AI cost management through Apptio and the open-source llm-d project, developed with Red Hat and Google, which reuses processed context to help lower large AI model operating costs. In addition, IBM’s expanded relationship with Google Cloud and its strategic partnership with OpenAI support its efforts to help clients scale enterprise AI.
Strong demand for infrastructure modernization and AI workloads is also supporting IBM’s performance. Infrastructure revenue increased 5%, driven by 32% growth in Distributed Infrastructure, while storage delivered record revenue growth and gained market share across Flash, Fusion, Tape and IBM Z storage. The z17 mainframe platform continued to perform strongly, generating more than $1 billion in incremental revenue over six quarters compared with prior programs. IBM also reported strong demand for its new midrange IBM Z systems. Rising AI infrastructure requirements are supporting demand for differentiated storage solutions, while the company’s focus on security, reliability and scalability continues to support its mainframe offering. Consulting revenue grew 2%, driven by demand for AI-enabled transformation, application modernization, data and AI transformation, and cybersecurity.
IBM’s profitability, cash generation and full-year outlook reflect disciplined execution and productivity initiatives. Third-quarter operating pretax margin expanded 70 bps, while operating earnings per share increased 11%. Free cash flow reached approximately $8 billion in the first nine months of 2026, up 8% year over year, and the company reported its highest nine-month free cash flow margin in its reported history. Productivity initiatives generated efficiencies across general and administrative expenses, sales and marketing, software development, supply chain and services delivery. IBM continues to expect 2026 revenue growth of 4-5% and 100 bps of operating pretax margin expansion, while raising its free cash flow growth expectation to more than $1 billion. The company also expects full-year Software growth of 7-8%.
However, the company’s growth in Transaction Processing may moderate after its strong third-quarter performance. Transaction Processing revenue increased 10%, partly reflecting the closure of deals deferred from the second quarter alongside the normal third-quarter purchasing cycle. Management stated that it does not expect double-digit growth to continue and anticipates more normalized performance, with possible moderation in the fourth quarter. Although the company expects Transaction Processing growth to be flat for the full year, the timing of customer purchases and the pace at which mainframe capacity translates into software revenue remain important factors in its performance.
IBM’s Consulting profitability faced pressure as the company reinvested productivity gains into digital assets to support its transition toward a Services-as-software model. While Consulting revenue increased 2%, its segment profit margin declined modestly. Higher capital expenditures, cash taxes and net interest expense are also offsetting some of the growth in adjusted EBITDA and affecting free cash flow. Although the company expects free cash flow growth of more than $1 billion for 2026, management identified these higher costs as offsets to the expected improvement.
Share Price Trajectory for NTAP & IBMOver the past three months, NTAP stock has soared 32.2% while IBM rose 22.6%.
Image Source: Zacks Investment Research
Valuation ComparisonGoing by the price/earnings ratio, NTAP’s shares currently trade at 25 forward earnings, close to 19.28 for IBM.
Image Source: Zacks Investment Research
How Do Zacks Estimates Compare for NTAP & IBM?NTAP is currently witnessing an uptrend in estimate revisions. Earnings estimates for fiscal 2027 have been revised up 11.42% to $10.05 over the past 60 days, while estimates for fiscal 2028 have risen 11.5% to $11.03.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for IBM’s earnings has decreased over the past 60 days.
Image Source: Zacks Investment Research
NTAP or IBM: Which Stock Deserves Investors’ Attention Now?NTAP appears to be the more attractive investment choice, supported by stronger share price momentum, robust business growth and upward earnings estimate revisions, along with its Zacks Rank #1 (Strong Buy), compared with IBM’s Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
Listen below or on the go on Apple Podcasts and Spotify
Tesla shares slip as analysts clash over its future. (0:14) IBM warns companies are questioning returns on AI spend. (1:17) Anthropic unveils agent Claude Duet. (2:24)
This is an abridged transcript of the podcast:
Our top story so far, Tesla (TSLA) shares are lower after the EV maker reported flat Q3 revenue and EPS that slightly topped forecasts.
Seeking Alpha analyst Justin Purohit says while the market “appears disappointed by the YOY decline in EV deliveries and the company's growing emphasis on businesses that have yet to generate external sales, I believe the longer-term outlook remains positive.”
“Improving automotive margins, strong energy storage demand, and the growing FSD subscription base provide reasons for optimism.”
But SA analyst Daniel Jones says the stock is “woefully overpriced.”
“Even if it were growing at a rapid pace, it would be difficult to justify these valuations. And considering the risks that lie ahead, such as weakness in the automotive space, should economic conditions deteriorate, I believe that reaffirming the business as a Strong Sell candidate makes all the sense in the world."
On the call, CEO Elon Musk said Tesla is pushing hard for FSD approvals in more regions, including Europe. He added that the Optimus robot is in early production, but its design is still being tweaked, and its AI is still being integrated.
Among other active stocks, IBM (IBM) is lower despite a Q3 beat as CEO Arvind Krishna said large enterprises are becoming more cautious about the returns on their AI investments and “getting worried if some of the AI spending is completely out of control with no real return.”
Lam Research (LRCX) is down after the chip equipment maker offered an outlook for the coming quarter with the top-line midpoint just $60M above forecasts.
Procter & Gamble (PG) is higher, with fiscal Q1 organic sales growth doubling expectations, up 4%. The beauty, personal care, grooming and fabric and home care segments all saw sales gains.
American Airlines (AAL) is under pressure after Q3 results underscored its vulnerability to rising, unhedged fuel costs. Double-digit gains in American's top line and other cost efficiencies were not enough to offset a 67.5% surge in fuel expenses, up nearly $2B from a year ago.
And Snap-on (SNA) is the biggest S&P 500 decliner after the maker of professional tools and automotive diagnostic equipment missed Q3 revenue and earnings targets as soaring diesel prices prompted franchisees to cut inventories.
And in other news of note, Anthropic (ANTHRO) has unveiled its new agent, Claude Duet, as it looks to take on Meta Platforms' (META) Muse and others in the space.
Claude Duet is built on the AI frontier lab's Claude Opus 5.5 model and can handle tasks such as sending briefs and interacting with connected apps.
Claude Duet is available in research preview through a waitlist for U.S. users on the Pro and Max plans. It can be accessed through a separate app for iOS and Android, or on the web through Claude.
Key Takeaways IBM raised its 2026 free cash flow growth outlook to over $1 billion while maintaining 4-5% revenue growth.Software revenue rose 9%, fueled by stronger transactions, 11% Red Hat growth and rising OpenShift demand.IBM targets 100 basis points of margin expansion as AI adoption and mainframe capacity support growth.
International Business Machines Corporation (IBM - Free Report) emphasized accelerating software demand, operational efficiency and enterprise AI adoption during its third-quarter 2026 earnings call. Management raised its free cash flow outlook while maintaining its full-year revenue growth expectations.
The discussion centered on recovering software transactions, Red Hat momentum and infrastructure demand. Executives also addressed questions about the sustainability of software growth and opportunities emerging from enterprise AI modernization.
IBM Raises Cash Flow Outlook, Maintains Revenue GuidanceIBM expects full-year 2026 revenue growth of 4% to 5% at constant currency. Management raised its annual free cash flow growth forecast to more than $1 billion year over year.
Chief financial officer James Kavanaugh attributed the improved cash outlook to adjusted EBITDA growth and productivity initiatives, partially offset by higher capital expenditures, cash taxes and interest expenses.
IBM reported operating earnings of $2.95 per share, exceeding the Zacks Consensus Estimate of $2.88. Revenue reached $17.1 billion, surpassing the $16.84 billion consensus estimate. Operating pretax margin expanded 70 basis points (bps).
IBM's Software Momentum Strengthens on Transaction RecoverySoftware revenue increased 9% at constant currency, accelerating four percentage points sequentially. Kavanaugh highlighted strong recurring revenue and improved transactional execution.
Red Hat grew 11%, supported by bookings growth in the high teens. OpenShift annual recurring revenue reached $2.4 billion, growing more than 30%. Data revenue increased 20%, while Transaction Processing advanced 10%.
During questioning from Evercore ISI, CEO Arvind Krishna emphasized that AI-driven application modernization supports sustained demand for OpenShift and Confluent. Kavanaugh clarified that roughly one-quarter of software acceleration came from previously delayed transactions, while three-quarters reflected new business.
IBM Sees Mainframe Demand Supporting Future GrowthInfrastructure revenue increased 5% at constant currency, driven by 32% growth in Distributed Infrastructure. Storage demand remained strong as enterprises expanded AI-related infrastructure.
Krishna highlighted the z17 platform's performance, noting that it generated more than $1 billion of incremental revenue across six quarters compared with previous programs.
Responding to Bank of America, Krishna cautioned that Transaction Processing's double-digit growth should moderate. However, Kavanaugh pointed to expanding installed mainframe capacity as a future software monetization opportunity, particularly entering 2027.
IBM Expands Enterprise AI and Hybrid Cloud OpportunitiesManagement positioned enterprise AI adoption around data integration, workflow modernization and secure deployment rather than isolated experimentation.
Krishna highlighted Confluent's real-time data capabilities, HashiCorp's security tools and Red Hat's hybrid infrastructure. IBM also discussed its Lightwell security offering, which has developed a pipeline approaching $700 million.
During questions from Jefferies, Krishna emphasized growing enterprise scrutiny of AI investment returns. He explained that meaningful productivity improvements require workflow redesign and integration with existing systems, creating opportunities for IBM's software and consulting businesses.
IBM Targets Margin Expansion Through ProductivityKavanaugh reiterated IBM's expectation for 100 bps of full-year operating pretax margin expansion, supported by productivity improvements and expense discipline.
Software segment profit margin increased 210 bps, while Infrastructure expanded 120 bps. Consulting margins declined as IBM reinvested productivity savings into digital assets and AI-enabled service delivery.
Consulting revenue increased 2% at constant currency. AI-related work represented approximately 30% of quarterly consulting revenue and 35% of backlog, reflecting customers' focus on enterprise transformation.
IBM Maintains a Disciplined Growth StrategyManagement's commentary reflected confidence in software-led growth while maintaining cautious assumptions for the remainder of 2026.
Krishna and Kavanaugh emphasized continued investment in hybrid cloud, enterprise AI and quantum computing alongside operational efficiency. Their forward-looking priorities center on recurring revenue, infrastructure modernization and stronger cash generation.
What IBM's Zacks Rank and Style Scores IndicateIBM currently carries a Zacks Rank #3 (Hold), indicating a neutral near-term outlook under the Zacks ranking system. Its Value Score of D, Growth Score of C and Momentum Score of F indicate relatively weak characteristics across these investment styles. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here.
The company's VGM Score of F also reflects an unfavorable combined assessment of value, growth and momentum. Zacks generally favors stocks carrying a Rank #1 or #2 (Buy) alongside Style Scores of A or B. IBM's current combination warrants a cautious interpretation, while its Zacks Rank could change as analysts revise earnings estimates following the third-quarter results.
Late on October 21, International Business Machines Corporation (NYSE: IBM) stock whipsawed as it first rapidly rallied more than 7% before reversing just as fast and finding itself at $238.29 – 5.24% below the latest $251.46 close – in the Thursday, October 22, pre-market.
IBM stock price one-day chart. Source: Google Curiously, the dramatic IBM share price moves were driven by the technology giant’s latest quarterly earnings.
Notably, the company disclosed a double beat, with revenue coming in at $17.10 billion – analysts were anticipating $16.82 billion – and earnings per share (EPS) at $2.95 – Wall Street was calling for $2.86.
IBM stock falls despite strong results and guidance Additionally, sales overall rose 5% from the year before, and net income also rocketed in the same timeframe from $1.74 billion to $2.19 billion.
Simultaneously, IBM highlighted that its clients have started using ‘super intelligence’ (SI) – President Donald Trump’s term for artificial intelligence (AI) – ‘in ways that transform entire operating models’
Lastly, the company’s software sales were also strong and came in above the expected $7.66 billion, at $7.80 billion.
Looking ahead, IBM explained it anticipated continued sales growth of between 4% and 5% and a free-cash-flow increase of more than $1 billion. Reflecting on the whole-year revenue estimates of $32, the company’s leadership appeared to concur with the forecast.
Overall, the filing itself presented few clear reasons for the violent whipsaw and the relatively steep early morning decline.
Still, the phenomenon is not unheard of, and early 2026 featured multiple instances of big tech firms reporting strong results and then, nonetheless, plummeting, arguably due to underperforming the marketing narratives regarding the potential of AI.
Wall Street reacts to IBM’s latest earnings report Finally, Wall Street’s reaction to the report proved significantly more positive than investors’. Four out of the five new ratings available by press time on the morning of October 22 featured ‘Buy’ recommendations for IBM equity.
The singular outlier – Morgan Stanley’s (NYSE: MS) Erik Woodring – opted to describe the stock as a ‘Hold’, though he increased his 112-month price target from $238 to $240.
Meanwhile, Bank of America (NYSE: BAC), Jefferies, and Citi (NYSE: C) all came out as equally – and highly – optimistic with $280 forecasts, and Barclays analyst Raimo Lenschow was close behind with an upgrade from $262 to $277.
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International Business Machines Corporation (NYSE:IBM) shares are trading lower Thursday despite third-quarter results that beat estimates on earnings and revenue, reversing a gain of about 4% from Wednesday’s session.
IBM stock is showing notable weakness. Why are IBM shares down?
IBM Beats on Earnings and Revenue as Software Growth AcceleratesIBM reported third-quarter adjusted earnings per share of $2.95, beating the consensus estimate of $2.86. It reported revenue of $17.103 billion, up 5% from a year earlier, beating the consensus estimate of $16.822 billion. Software revenue rose 8% to $7.8 billion, consulting was flat at $5.3 billion, and infrastructure rose 4% to $3.7 billion. Cash flow from operations was $4 billion, and free cash flow was $3 billion. IBM ended the period with $11.1 billion of cash, restricted cash and marketable securities. Its board approved a quarterly dividend of $1.69 per share, payable Dec. 10 to shareholders of record as of Nov. 10.
"Our clients are now deploying Super Intelligence in ways that transform entire operating models, instead of simply addressing narrow or novel problems," said Arvind Krishna, chairman, president and CEO of IBM.
IBM Affirms Its Full-Year Revenue Guidance and Raises Its Cash Flow OutlookIBM affirmed fiscal 2026 sales guidance of $70.236 billion to $70.912 billion, versus the consensus estimate of $70.343 billion. It kept its constant-currency revenue growth target at 4% to 5%. It also raised its full-year free cash flow outlook, and now expects an increase of more than $1 billion from a year earlier.
Why IBM Shares Are Lower Despite the BeatAccording to Investing.com, IBM’s stock surged after hours Wednesday and then reversed sharply once management took to the conference call. Krishna said on the call that corporate clients are growing concerned about whether AI spending is generating measurable returns. IBM reported an adjusted gross margin of 58.5%, below the 59.1% consensus, and its consulting segment’s gross margin narrowed from the prior quarter. It also kept its full-year constant-currency revenue growth target unchanged at 4% to 5%, which disappointed investors hoping for an upward revision after the beat. Investing.com also cited a senior vice president’s disclosed reduction of their IBM stake by more than a third as a minor overhang, and said the broader market was lower, with the Nasdaq down 1.8% and the S&P 500 down 1.0%.
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IBM Shares Drop IBM Price Action: At the time of publication, IBM shares are trading 4.56% lower at $240.00, according to data from Benzinga Pro.
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IBM shares fell more than 5% during premarket trading on Thursday despite the technology company reporting better-than-expected third-quarter earnings and revenue. The company posted adjusted earnings of $2.95 per share, beating analyst estimates of $2.86, while revenue reached $17.10 billion against expectations of $16.82 billion.
Revenue Growth: Accelerated to 6% year over year in Q3 2026, above the July base case.Software Revenue: Grew 9% (over 4 points organic); annual recurring revenu
International Business Machines Corporation ( IBM ) Q3 2026 Earnings Call October 21, 2026 5:00 PM EDT Company Participants Olympia McNerney - Global Head of Investor Relations Arvind Krishna - CEO, President & Chairman James Kavanaugh - CFO and Senior VP of Finance & Operations Conference Call Participants Amit Daryanani - Evercore ISI Institutional Equities, Research Division Wamsi Mohan - BofA Securities, Research Division Benjamin Reitzes - Melius Research LLC Raimo Lenschow - Barclays Bank PLC, Research Division Brent Thill - Jefferies LLC, Research Division Fatima Boolani - Citigroup Inc., Research Division Brian Essex - JPMorgan Chase & Co, Research Division Matthew Swanson - RBC Capital Markets, Research Division Presentation Operator Welcome, and thank you for standing by. [Operator Instructions] Today's conference is being recorded.
If you glanced at a trading chart for International Business Machines (IBM +3.94%) on Wednesday evening, you could be forgiven for thinking someone knocked over a glass of water on the exchange's main server rack.
Big Blue put together an undeniable earnings win, enjoyed a brief bounce into after-hours euphoria, and then promptly fell off a cliff before dinner was even over.
Image source: Getty Images.
A picture-perfect quarter on paperBig Blue delivered a clean performance across the board. Strong System Z sales helped, alongside rampant growth in several software categories. Revenue landed at $17.1 billion, topping consensus expectations of $16.8 billion, while adjusted earnings of $2.95 per share handily beat Wall Street's $2.86 estimate. The top-line figure was a 5.9% increase from the year-ago report while earnings jumped 11% higher.
Ergo, IBM grew sales while widening its profit margins. The stock jumped as much as 7.3% higher in the early after-hours trading.
But just as investors were getting comfortable with IBM's wins, the 5:00 p.m. ET conference call threw a spanner in the narrative. Instead of powering the usual market hype engine, CEO Arvind Krishna offered a surprisingly blunt assessment of enterprise software budgets.
The 5:35 p.m. reality checkThe clear signal of AI market trouble landed around 5:35 p.m. ET. In response to an analyst probe on corporate IT budgets, Krishna candidly noted that corporate clients are "getting worried if some of the AI spending [is] completely out of control with no real return."
He added that real implementation requires extensive workflow reengineering: "It is not a little [robotic process automation] tool that you bolt on, and you get something."
IBM's stock plunged at that exact moment. Whee after-hours trading closed, the stock was down 4.ad.
IBM International Business Machines$251.46+$9.54 (+3.94%)
NYSE · As of 4:00 PM ET 10/21/26
A one-two punch for AI infrastructureGranted, IBM wasn't working in a vacuum on Wednesday. Tesla (TSLA +3.41%) also reported earnings the same night, and Elon Musk's empire also cast a chill across extended trading with its own guidance. Tesla's forecast hinted at cooler data center capital expenditures, weighing on the company's energy business and spooking AI investors.
But Krishna's frank admission threw more fuel on the fire. Infrastructure heavyweights like Nvidia, Oracle, and CoreWeave didn't flinch during Krishna's spoken remarks, but they began bleeding red right around 6:00 p.m. ET -- the exact moment the call adjourned and automated transcript summaries landed in institutional inboxes.
When an industry titan tells you customers are balking at the bill for unproven tech, the rest of the market tends to listen. The reaction is even sharper when two titans issue similar warnings in unison.
Anders Bylund has positions in International Business Machines and Nvidia. The Motley Fool has positions in and recommends International Business Machines, Nvidia, Oracle, and Tesla. The Motley Fool has a disclosure policy.
The AI Buildout Is Only 15% Complete—Here Is Where the Next Dollar Actually GoesInternational Business Machines NYSE: IBM reported third-quarter 2026 revenue growth of 6% at constant currency, led by accelerating software sales, infrastructure demand and modest consulting growth. The company said operating pre-tax margin expanded 70 basis points and diluted operating earnings per share rose 11%.
IBM Chairman, President and CEO Arvind Krishna said the results exceeded the base case outlined in July and reflected “acceleration across our segments,” including 9% software growth, 5% infrastructure growth and 2% consulting growth. The company raised its full-year free-cash-flow growth outlook to more than $1 billion while maintaining its expectation for 2026 revenue growth of 4% to 5%.
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Software Growth Accelerates The Pentagon's $350 Million Quantum Push: Why IonQ Could Benefit More Than D-WaveSoftware revenue growth accelerated four percentage points sequentially to 9%, according to Chief Financial Officer Jim Kavanaugh. IBM’s annual recurring revenue base grew 8% to $24.9 billion, while three of its four software subsegments posted double-digit revenue growth.
Red Hat revenue rose 11%, with bookings returning to high-teens growth. OpenShift annual recurring revenue reached $2.4 billion and grew more than 30%. IBM said the performance reflected customer efforts to modernize applications and deploy AI workloads across hybrid environments.
Meta’s Muse Highlights Arm’s Growing Role in AI InfrastructureData revenue increased 20%, supported by Confluent, where bookings grew about 20%. Krishna said enterprises increasingly need real-time data capabilities to support AI applications, particularly because much of their data remains inside enterprise environments rather than in public clouds.
Transaction processing revenue grew 10%, reversing weakness seen in the prior quarter. Kavanaugh said approximately one-quarter of the software growth acceleration came from deals that had slipped from the second quarter, while roughly three-quarters came from new business. IBM closed around two-thirds of the large deals that slipped from the prior quarter.
During the question-and-answer session, executives said they expect transaction-processing growth to moderate after the third-quarter rebound. Kavanaugh said the company is forecasting flat transaction-processing growth for the full year, while pointing to increasing mainframe capacity as a future monetization opportunity.
Red Hat revenue grew 11%, with bookings in the high teens. OpenShift ARR exceeded $2.4 billion and grew more than 30%. Data revenue rose 20%. Transaction processing revenue increased 10%. IBM said Lightwell, its open-source software security offering, has developed a pipeline approaching $700 million. Infrastructure Strengthens as Storage Demand Rises Infrastructure revenue rose 5%, driven by 32% growth in distributed infrastructure. IBM said storage delivered record revenue growth and gained market share across FlashSystem, Storage Fusion, Tape and IBM Z Storage offerings. Kavanaugh said the company exited the quarter with a sizable distributed-infrastructure backlog that supports continued fourth-quarter momentum.
IBM’s z17 mainframe cycle continued to outperform prior programs, according to management. Krishna said z17 has generated more than $1 billion in incremental revenue over six quarters compared with earlier programs. The company also reported its strongest mid-range IBM Z launch in nearly two decades following the introduction of new single-frame and rack-mount systems in July.
Kavanaugh said clients representing roughly 85% of installed MIPS capacity are maintaining or expanding capacity, while aggregate installed capacity has tripled over the last few mainframe programs.
Consulting and AI Strategy Consulting revenue increased 2%, with strategy and technology revenue up 4%. IBM said cybersecurity delivered nearly double-digit growth in intelligent operations. AI-related work represented about 30% of consulting revenue during the quarter and 35% of backlog.
Krishna said clients are moving beyond AI experimentation and are focusing more closely on return on investment, workflow redesign, integration with existing systems and control of AI spending. He said enterprises are also increasingly focused on sovereign AI, including the ability to keep data, models and logs under their own control.
IBM highlighted its platforms for data, AI development and agent orchestration, identity and policy management, and hybrid-cloud operations. The company said it is expanding partnerships, including a new strategic relationship with OpenAI and an expanded relationship with Google Cloud.
Krishna also discussed the cost difference between frontier AI models and open-weight alternatives. He said open-weight models have become closer in performance to leading models and can potentially run at 10% to 25% of their token cost, depending on the deployment.
Margins, Cash Flow and Outlook Adjusted EBITDA margin expanded 60 basis points, while operating pre-tax margin expanded 70 basis points. Software segment profit margin rose 210 basis points and infrastructure segment margin increased 120 basis points. Consulting margin declined modestly as IBM reinvested productivity gains into digital assets and its services-as-software model.
For the first nine months of 2026, IBM generated about $8 billion in free cash flow, up approximately $600 million, or 8%, from a year earlier. The company ended the quarter with $11.1 billion in cash and returned $4.8 billion to shareholders through dividends during the first nine months.
IBM expects full-year software growth of approximately 7% to 8%, with about 7% as its revised base case. It continues to forecast low-double-digit infrastructure revenue growth and low- to mid-single-digit consulting growth. The company also maintained its expectation for 100 basis points of full-year operating pre-tax margin expansion.
Looking further ahead, Kavanaugh said IBM plans to provide more detail on 2027 targets in January. He pointed to Red Hat demand, Confluent integration, Lightwell, virtualization, hybrid cloud opportunities and expected growth synergies from acquisitions as factors supporting the company’s longer-term software outlook.
About International Business Machines (NYSE:IBM)International Business Machines Corporation NYSE: IBM, commonly known as IBM, is a global technology and consulting company that helps organizations modernize their information technology and business operations. Its offerings include hybrid cloud solutions, artificial intelligence software and services, enterprise software, IT infrastructure, cybersecurity, data analytics, and technology consulting.
IBM provides products and services to businesses, governments, and other institutions across industries and regions worldwide.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected].
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IBM (IBM - Free Report) reported $17.1 billion in revenue for the quarter ended September 2026, representing a year-over-year increase of 4.7%. EPS of $2.95 for the same period compares to $2.65 a year ago.
The reported revenue compares to the Zacks Consensus Estimate of $16.87 billion, representing a surprise of +1.37%. The company delivered an EPS surprise of +2.43%, with the consensus EPS estimate being $2.88.
While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determine their next move, some key metrics always offer a more accurate picture of a company's financial health.
As these metrics influence top- and bottom-line performance, comparing them to the year-ago numbers and what analysts estimated helps investors project a stock's price performance more accurately.
Here is how IBM performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts:
Revenue- Software: $7.8 billion versus $7.67 billion estimated by five analysts on average. Compared to the year-ago quarter, this number represents a +8.3% change.Revenue- Consulting: $5.34 billion versus the five-analyst average estimate of $5.38 billion. The reported number represents a year-over-year change of +0.2%.Revenue- Other: $66 million versus $42.18 million estimated by five analysts on average. Compared to the year-ago quarter, this number represents a +73.7% change.Revenue- Financing: $192 million versus $198.44 million estimated by five analysts on average. Compared to the year-ago quarter, this number represents a -4% change.Revenue- Infrastructure: $3.71 billion compared to the $3.54 billion average estimate based on five analysts. The reported number represents a change of +4.2% year over year.Revenue- Intelligent Operations: $2.4 billion compared to the $2.44 billion average estimate based on four analysts. The reported number represents a change of 0% year over year.Revenue- Automation: $1.9 billion compared to the $2.01 billion average estimate based on four analysts. The reported number represents a change of 0% year over year.Revenue- Strategy and Technology: $3 billion compared to the $2.95 billion average estimate based on four analysts. The reported number represents a change of +3.5% year over year.Revenue- Hybrid Cloud: $2.1 billion versus the four-analyst average estimate of $2.09 billion. The reported number represents a year-over-year change of +10.5%.Revenue- Infrastructure Support: $1.3 billion versus $1.28 billion estimated by four analysts on average. Compared to the year-ago quarter, this number represents a 0% change.Revenue- Data: $1.7 billion versus $1.72 billion estimated by four analysts on average. Compared to the year-ago quarter, this number represents a +13.3% change.Revenue- Transaction Processing: $2.1 billion versus $1.78 billion estimated by four analysts on average. Compared to the year-ago quarter, this number represents a +10.5% change.View all Key Company Metrics for IBM here>>>
Shares of IBM have returned +4.6% over the past month versus the Zacks S&P 500 composite's +1% change. The stock currently has a Zacks Rank #3 (Hold), indicating that it could perform in line with the broader market in the near term.
On its third quarter 2026 earnings call, held on Oct. 21, 2026, IBM (IBM +3.94%) announced revenue growth of 6%, led by software growth of 9%. Accelerated expansion across software and mainframe platforms shows how enterprise technology modernization produces recurring cash flow. Three takeaways stand out for long-term investors.
1. Transaction Processing Rebound Validates Mainframe DemandSoftware revenue accelerated as clients expanded core workloads on mission-critical platforms. Management explained that second-quarter softness in Transaction Processing, the software segment handling core mainframe operations, resulted from deal timing rather than customer defections.
Transaction processing grew 10%, underscoring the strategic importance of the mainframe and validating our view that the softness we saw in the second quarter reflected timing rather than underlying demand.
-- Arvind Krishna, Chairman, President, and Chief Executive Officer2. Security Offering Lightwell Builds a $700 Million PipelineEnterprise software security represents an expanding market as businesses move to protect open-source code. Management made Lightwell, the company's open-source software security management tool, generally available and quickly built a substantial sales backlog.
Lightwell was recently made generally available, and we have strong early demand with a pipeline that is already approaching $700 million.
-- Jim Kavanaugh, Senior Vice President and Chief Financial Officer3. Productivity Execution Drives Cash GenerationStructural cost discipline across corporate operations is pushing profit margins higher. Operational efficiencies boosted adjusted earnings before EBITDA, or earnings before interest, taxes, depreciation, and amortization, which fueled free cash flow growth over the first nine months of the year.
Through the first nine months of the year, we generated about $8 billion of free cash flow, up about $600 million year over year, driven by about $1 billion increase in Adjusted EBITDA, offset by higher CapEx, cash taxes, and net interest expense.
-- Jim Kavanaugh, Senior Vice President and Chief Financial OfficerLooking AheadSoftware acceleration and recurring contracts are propelling the business, and management isn't hiding its satisfaction. Structural advantages in mainframe architecture and hybrid cloud infrastructure position the company to capture long-term workload growth while management tracks software execution and operational productivity.
Our results reinforce our confidence in delivering revenue growth for 2026 in a range of 4%-5% and enable us to raise our year-over-year free cash flow growth expectation to more than $1 billion.
-- Arvind Krishna, Chairman, President, and Chief Executive OfficerProductivity initiatives continue expanding margins as artificial intelligence adoption accelerates across enterprise workflows.
Our portfolio strength, disciplined execution, and relentless focus on productivity reinforce my confidence in our trajectory.
-- Arvind Krishna, Chairman, President, and Chief Executive OfficerThe Motley Fool has positions in and recommends International Business Machines. The Motley Fool has a disclosure policy.
IBM (IBM - Free Report) came out with quarterly earnings of $2.95 per share, beating the Zacks Consensus Estimate of $2.88 per share. This compares to earnings of $2.65 per share a year ago. These figures are adjusted for non-recurring items.
This quarterly report represents an earnings surprise of +2.43%. A quarter ago, it was expected that this technology and consulting company would post earnings of $2.93 per share when it actually produced earnings of $2.93, delivering no surprise.
Over the last four quarters, the company has surpassed consensus EPS estimates three times.
IBM, which belongs to the Zacks Computer - Integrated Systems industry, posted revenues of $17.1 billion for the quarter ended September 2026, surpassing the Zacks Consensus Estimate by 1.37%. This compares to year-ago revenues of $16.33 billion. The company has topped consensus revenue estimates three times over the last four quarters.
The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.
IBM shares have lost about 18.3% since the beginning of the year versus the S&P 500's gain of 12.7%.
What's Next for IBM?While IBM has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?
There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.
Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.
Ahead of this earnings release, the estimate revisions trend for IBM was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $4.62 on $20.46 billion in revenues for the coming quarter and $12.34 on $70.44 billion in revenues for the current fiscal year.
Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Computer - Integrated Systems is currently in the top 18% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
One other stock from the same industry, NCR Voyix (VYX - Free Report) , is yet to report results for the quarter ended September 2026.
This maker of ATMs and other hardware and software to handle payments is expected to post quarterly earnings of $0.27 per share in its upcoming report, which represents a year-over-year change of -12.9%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days.
NCR Voyix's revenues are expected to be $534 million, down 21.9% from the year-ago quarter.
Exceeded expectations with accelerated revenue growth led by Software and Infrastructure; Raises outlook for full-year free cash flow
, /PRNewswire/ -- IBM (NYSE: IBM) today announced third-quarter 2026 earnings results.
"Disciplined execution throughout the quarter drove accelerated revenue growth and strong free cash flow. Our clients are now deploying Super Intelligence in ways that transform entire operating models, instead of simply addressing narrow or novel problems. IBM's technology and expertise are helping organizations drive growth and serve customers with greater speed, precision and efficiency than ever before," said Arvind Krishna, IBM chairman, president and chief executive officer. "For the full year, we continue to expect constant currency revenue growth in the range of four-to-five percent, and we now expect free cash flow to increase by more than $1 billion year-over-year."
Third-Quarter Highlights
Revenue
- Revenue of $17.1 billion, up 5 percent, up 6 percent at constant currency
- Software revenue up 8 percent, up 9 percent at constant currency
- Consulting revenue flat, up 2 percent at constant currency
- Infrastructure revenue up 4 percent, up 5 percent at constant currency
Profit
- Gross Profit Margin: GAAP: 56.8 percent, down 50 basis points; Operating (Non-GAAP): 58.5 percent, down 20 basis points
- Pre-Tax Income Margin: GAAP: 14.6 percent, down 30 basis points; Operating (Non-GAAP): 19.3 percent, up 70 basis points
Cash Flow
- Year to date, net cash from operating activities of $11.8 billion; free cash flow of $7.8 billion
THIRD-QUARTER 2026 INCOME STATEMENT SUMMARY
Revenue
Gross
Profit
Gross
Profit
Margin
Pre-tax
Income
Pre-tax
Income
Margin
Net
Income
Diluted
Earnings
Per Share
GAAP from
Continuing
Operations
$ 17.1 B
$ 9.7 B
56.8
%
$ 2.5 B
14.6
%
$ 2.2 B
$ 2.31
Year/Year
5
% (1)
4
%
(0.5)
Pts
3
%
(0.3)
Pts
26
%
26
%
Operating
(Non-GAAP)
$ 10.0 B
58.5
%
$ 3.3 B
19.3
%
$ 2.8 B
$ 2.95
Year/Year
4
%
(0.2)
Pts
9
%
0.7
Pts
12
%
11
%
(1) 6% at constant currency.
"Demand across our portfolio combined with strong operational execution led to accelerated growth and solid operating pre-tax margin expansion in the quarter," said James Kavanaugh, IBM senior vice president and chief financial officer. "Just as we are helping clients extract value from their operations with Super Intelligence, we are driving tangible returns through our productivity initiatives inside IBM. This approach fuels profit and free cash flow growth and enables us to continue to invest in our business while returning value to shareholders through our dividend."
Segment Results for Third Quarter
Software — revenues of $7.8 billion, up 8 percent, up 9 percent at constant currency
- Hybrid Cloud (Red Hat) up 11 percent
- Automation down 3 percent
- Data up 19 percent, up 20 percent at constant currency
- Transaction Processing up 9 percent, up 10 percent at constant currency
Consulting — revenues of $5.3 billion, flat, up 2 percent at constant currency
- Strategy and Technology up 2 percent, up 4 percent at constant currency
- Intelligent Operations down 2 percent, flat at constant currency
Infrastructure — revenues of $3.7 billion, up 4 percent, up 5 percent at constant currency
- Hybrid Infrastructure up 8 percent, up 9 percent at constant currency
-- IBM Z down 20 percent, down 19 percent at constant currency
-- Distributed Infrastructure up 31 percent, up 32 percent at constant currency
- Infrastructure Support down 3 percent, down 2 percent at constant currency
Financing — revenues of $0.2 billion, down 4 percent, down 3 percent at constant currency
Cash Flow and Balance Sheet
In the third quarter, the company generated net cash from operating activities of $4.0 billion, up $0.9 billion year to year. IBM's free cash flow was $3.0 billion, up $0.7 billion year to year. The company returned $1.6 billion to shareholders in dividends in the third quarter.
For the first nine months of the year, the company generated net cash from operating activities of $11.8 billion, up $2.6 billion year to year. IBM's free cash flow was $7.8 billion, up $0.6 billion year to year.
IBM ended the third quarter with $11.1 billion of cash, restricted cash and marketable securities, down $3.4 billion from year-end 2025. The company invested $11.4 billion in acquisitions this year. Debt, including IBM Financing debt of $12.7 billion, totaled $63.8 billion, up $2.6 billion year to date.
Full-Year 2026 Expectations
Revenue: The company continues to expect full-year constant currency revenue growth in the range of four-to-five percent. At current foreign exchange rates, currency is expected to be neutral to growth for the year
Free cash flow: The company now expects full-year free cash flow to increase by more than $1 billion year-over-year
Dividend Declaration
The IBM board of directors approved a regular quarterly cash dividend of $1.69 per common share, to stockholders of record on November 10, 2026. With payment of the December 10, 2026 dividend, IBM will have paid consecutive quarterly dividends every year since 1916.
Forward-Looking and Cautionary Statements
Except for the historical information and discussions contained herein, statements contained in this release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on the company's current assumptions regarding future business and financial performance. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially, including, but not limited to, the following: a downturn in economic environment and client spending budgets; a failure of the company's innovation initiatives; damage to the company's reputation; risks from investing in growth opportunities; failure of the company's intellectual property portfolio to prevent competitive offerings and the failure of the company to obtain necessary licenses; the company's ability to successfully manage acquisitions, alliances and divestitures, including integration challenges, failure to achieve objectives, the assumption or retention of liabilities and higher debt levels; fluctuations in financial results; impact of local legal, economic, political, health and other conditions; the company's failure to meet growth and productivity objectives; ineffective internal controls; the company's use of accounting estimates; impairment of the company's goodwill or amortizable intangible assets; the company's ability to attract and retain key employees and its reliance on critical skills; impacts of relationships with critical suppliers; product and service quality issues; the development and use of AI, including the company's increased AI solutions and use of AI technologies; impacts of business with government clients; reliance on third party distribution channels and ecosystems; cybersecurity and data protection considerations; adverse effects related to climate change and other environmental matters; tax matters; legal proceedings and investigatory risks; the company's pension plans; currency fluctuations and customer financing risks; impact of changes in market liquidity conditions and customer credit risk on receivables; risk factors related to IBM securities; and other risks, uncertainties and factors discussed in the company's Form 10-Qs, Form 10-K and in the company's other filings with the U.S. Securities and Exchange Commission or in materials incorporated therein by reference.
Any forward-looking statement in this release speaks only as of the date on which it is made. Except as required by law, the company assumes no obligation to update or revise any forward-looking statements.
Presentation of Information in this Press Release
In an effort to provide investors with additional information regarding the company's results as determined by generally accepted accounting principles (GAAP), the company has also disclosed in this press release the following non-GAAP information, which management believes provides useful information to investors:
adjusting for currency (i.e., at constant currency);
presenting operating (non-GAAP) earnings per share amounts and related income statement items;
free cash flow;
net cash from operating activities excluding IBM Financing receivables;
adjusted EBITDA;
adjusted EBITDA margin.
The rationale for management's use of these non-GAAP measures is included in Exhibit 99.2 in the Form 8-K that includes this press release and is being submitted today to the SEC.
Conference Call and Webcast
IBM's regular quarterly earnings conference call is scheduled to begin at 5:00 p.m. ET, today. The Webcast may be accessed via a link at https://www.ibm.com/investor/events/earnings-3q26. Presentation charts will be available shortly before the Webcast.
Financial Results Below (certain amounts may not add due to use of rounded numbers; percentages presented are calculated from the underlying whole-dollar amounts).
Contact: IBM
Tim Davidson, 914-844-7847
[email protected]
Erin McElwee, 347-920-6825
[email protected]
INTERNATIONAL BUSINESS MACHINES CORPORATION
COMPARATIVE FINANCIAL RESULTS
(Unaudited; $ in millions except per share amounts)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2026
2025
2026
2025
REVENUE BY SEGMENT
Software
$ 7,804
$ 7,209
$ 22,617
$ 20,932
Consulting
5,335
5,324
15,934
15,706
Infrastructure
3,707
3,559
10,868
10,586
Financing
192
200
598
557
Other
66
38
165
68
TOTAL REVENUE
17,103
16,331
50,182
47,849
GROSS PROFIT
9,714
9,360
28,571
27,369
GROSS PROFIT MARGIN
Software
82.5
%
83.1
%
82.6
%
83.5
%
Consulting
27.4
%
29.3
%
27.9
%
28.0
%
Infrastructure
56.7
%
57.2
%
57.4
%
57.7
%
Financing
40.7
%
45.6
%
42.2
%
45.7
%
TOTAL GROSS PROFIT MARGIN
56.8
%
57.3
%
56.9
%
57.2
%
EXPENSE AND OTHER INCOME
SG&A
4,620
4,748
14,691
14,661
R&D
2,378
2,082
6,863
6,129
Intellectual property and custom development income
(164)
(219)
(501)
(687)
Other (income) and expense
(109)
(173)
(296)
(376)
Interest expense
491
492
1,451
1,457
TOTAL EXPENSE AND OTHER INCOME
7,217
6,931
22,208
21,184
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES
2,497
2,430
6,363
6,185
Pre-tax income margin
14.6
%
14.9
%
12.7
%
12.9
%
Provision for/(benefit from) income taxes
298
686
782
1,193
Effective tax rate
11.9
%
28.2
%
12.3
%
19.3
%
INCOME FROM CONTINUING OPERATIONS
$ 2,199
$ 1,744
$ 5,581
$ 4,992
DISCONTINUED OPERATIONS
Income from discontinued operations, net of taxes
(10)
0
(10)
1
NET INCOME
$ 2,190
$ 1,744
$ 5,571
$ 4,993
EARNINGS PER SHARE OF COMMON STOCK
Assuming dilution
Continuing operations
$ 2.31
$ 1.84
$ 5.86
$ 5.27
Discontinued operations
$ (0.01)
$ 0.00
$ (0.01)
$ 0.00
TOTAL
$ 2.30
$ 1.84
$ 5.85
$ 5.27
Basic
Continuing operations
$ 2.33
$ 1.87
$ 5.93
$ 5.36
Discontinued operations
$ (0.01)
$ 0.00
$ (0.01)
$ 0.00
TOTAL
$ 2.32
$ 1.87
$ 5.92
$ 5.36
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING (M's)
Assuming dilution
953.5
948.9
953.0
947.4
Basic
944.4
933.9
941.4
930.9
INTERNATIONAL BUSINESS MACHINES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
($ in millions)
At September 30,
2026
At December 31,
2025
ASSETS:
Current assets:
Cash and cash equivalents
$ 9,233
$ 13,587
Restricted cash
48
54
Marketable securities
1,825
830
Notes and accounts receivable - trade, net
5,794
8,112
Short-term financing receivables
Held for investment, net
5,638
7,344
Held for sale
774
1,131
Other accounts receivable, net
1,673
1,052
Inventories
1,945
1,220
Deferred costs
1,177
1,084
Prepaid expenses and other current assets
3,083
2,530
Total current assets
31,192
36,944
Property, plant and equipment, net
6,043
5,899
Operating right-of-use assets, net
3,114
3,129
Long-term financing receivables, net
6,844
7,708
Prepaid pension assets
7,715
7,544
Deferred costs
808
825
Deferred taxes
8,827
8,610
Goodwill
74,916
67,717
Intangibles, net
13,603
11,391
Investments and sundry assets
1,950
2,112
Total assets
$ 155,011
$ 151,880
LIABILITIES:
Current Liabilities:
Taxes
$ 1,867
$ 2,347
Short-term debt
7,013
6,424
Accounts payable
4,491
4,756
Compensation and benefits
3,668
4,114
Deferred income
15,164
16,101
Operating lease liabilities
749
800
Other liabilities
3,534
4,116
Total current liabilities
36,485
38,658
Long-term debt
56,804
54,836
Retirement-related obligations
8,452
9,018
Deferred income
4,318
4,271
Operating lease liabilities
2,574
2,547
Other liabilities
10,172
9,810
Total liabilities
118,805
119,139
EQUITY:
IBM stockholders' equity:
Common stock
65,137
63,318
Retained earnings
156,576
155,648
Treasury stock - at cost
(171,191)
(170,605)
Accumulated other comprehensive income/(loss)
(14,985)
(15,713)
Total IBM stockholders' equity
35,537
32,648
Noncontrolling interests
669
93
Total equity
36,206
32,740
Total liabilities and equity
$ 155,011
$ 151,880
INTERNATIONAL BUSINESS MACHINES CORPORATION
STATEMENT OF CASH FLOWS
(Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
($ in millions)
2026
2025 (1)
2026
2025 (1)
Cash flows from operating activities:
Net income
$ 2,190
$ 1,744
$ 5,571
$ 4,993
Adjustments to reconcile net income to cash provided by operating
activities:
Depreciation (2)
550
583
1,638
1,698
Amortization of capitalized software and acquired intangible assets
828
699
2,363
2,027
Stock-based compensation
535
444
1,539
1,285
Net (gain)/loss on divestitures, asset sales and other
(47)
(6)
(124)
(46)
Changes in operating assets and liabilities, net of
acquisitions/divestitures
(31)
(383)
804
(804)
Net cash provided by operating activities
4,025
3,081
11,791
9,153
Cash flows from investing activities:
Payments for property, plant and equipment
(332)
(255)
(793)
(709)
Proceeds from disposition of property, plant and equipment/other
29
7
60
118
Investment in software
(154)
(162)
(467)
(476)
Purchases of marketable securities and other investments
(1,898)
(1,169)
(4,769)
(8,910)
Proceeds from disposition of marketable securities and other
investments
640
1,199
3,763
6,162
Acquisition of businesses, net of cash acquired
(884)
(58)
(11,364)
(7,903)
Divestiture of businesses, net of cash transferred
28
-
30
(1)
Net cash provided by/(used in) investing activities
(2,570)
(437)
(13,539)
(11,719)
Cash flows from financing activities:
Proceeds from new debt
1,978
6
9,415
8,391
Payments to settle debt
(120)
(1,114)
(7,261)
(3,679)
Short-term borrowings/(repayments) less than 90 days - net
2
0
3
(29)
Common stock repurchases for tax withholdings
(352)
(414)
(817)
(851)
Proceeds from issuance of shares
143
134
562
535
Noncontrolling interest transactions (3)
575
-
557
(15)
Financing - other (3)
(24)
(54)
(98)
(93)
Cash dividends paid
(1,596)
(1,569)
(4,762)
(4,681)
Net cash provided by/(used in) financing activities
607
(3,012)
(2,402)
(423)
Effect of exchange rate changes on cash, cash equivalents and restricted
cash
3
(59)
(209)
429
Net change in cash, cash equivalents and restricted cash
2,064
(426)
(4,359)
(2,561)
Cash, cash equivalents and restricted cash at the beginning of the period
7,217
12,026
13,640
14,160
Cash, cash equivalents and restricted cash at the end of the period
$ 9,282
$ 11,600
$ 9,282
$ 11,600
____________________
(1) Reclassified to align with the Consolidated Statement of Cash Flows presentation.
(2) Includes operating lease right-of-use assets amortization.
(3) Prior-year amounts have been reclassified to conform to the change in 2026 presentation.
INTERNATIONAL BUSINESS MACHINES CORPORATION
GAAP NET INCOME TO ADJUSTED EBITDA RECONCILIATION
(Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
($ in billions)
2026
2025
Yr/Yr
2026
2025
Yr/Yr
Net income as reported (GAAP)
$ 2.2
$ 1.7
$ 0.4
$ 5.6
$ 5.0
$ 0.6
Less: income from discontinued operations, net of tax
0.0
0.0
0.0
0.0
0.0
0.0
Income from continuing operations
2.2
1.7
0.5
5.6
5.0
0.6
Provision for/(benefit from) income taxes from continuing ops.
0.3
0.7
(0.4)
0.8
1.2
(0.4)
Pre-tax income from continuing operations (GAAP)
2.5
2.4
0.1
6.4
6.2
0.2
Non-operating adjustments (before tax)
Acquisition-related charges (1)
0.7
0.6
0.1
2.1
1.7
0.3
Non-operating retirement-related costs/(income)
0.1
0.0
0.1
0.3
0.1
0.2
Operating (non-GAAP) pre-tax income from continuing ops.
3.3
3.0
0.3
8.7
8.0
0.7
Net interest expense
0.4
0.3
0.1
1.1
0.9
0.2
Depreciation/amortization of non-acquired intangible assets
0.7
0.7
0.0
2.1
2.1
0.0
Stock-based compensation
0.5
0.4
0.1
1.5
1.3
0.3
Workforce rebalancing charges
0.0
0.0
0.0
0.4
0.4
0.0
Corporate (gains) and charges (2)
0.0
0.0
0.0
(0.2)
0.0
(0.2)
Adjusted EBITDA
$ 4.9
$ 4.6
$ 0.3
$ 13.7
$ 12.7
$ 1.0
Revenue
$ 17.1
$ 16.3
5 %
$ 50.2
$ 47.8
5 %
GAAP net income margin
12.8 %
10.7 %
2.1pts
11.1 %
10.4 %
0.7pts
Adjusted EBITDA margin
28.7 %
28.0 %
0.6pts
27.2 %
26.5 %
0.8pts
____________________
(1) Primarily consists of amortization of acquired intangible assets.
(2) Primarily consists of unique corporate actions such as gains on divestitures and asset sales.
INTERNATIONAL BUSINESS MACHINES CORPORATION
SEGMENT DATA
(Unaudited)
Three Months Ended September 30, 2026
($ in millions)
Software
Consulting
Infrastructure
Financing
Revenue
$ 7,804
$ 5,335
$ 3,707
$ 192
Segment profit
$ 2,734
$ 653
$ 715
$ 108
Segment profit margin
35.0
%
12.2
%
19.3
%
56.1
%
Change YTY revenue
8.2
%
0.2
%
4.2
%
(3.9)
%
Change YTY revenue - constant currency
8.7
%
1.8
%
4.9
%
(3.3)
%
Three Months Ended September 30, 2025
($ in millions)
Software
Consulting
Infrastructure
Financing
Revenue
$ 7,209
$ 5,324
$ 3,559
$ 200
Segment profit
$ 2,374
$ 686
$ 644
$ 123
Segment profit margin
32.9
%
12.9
%
18.1
%
61.6
%
Nine Months Ended September 30, 2026
($ in millions)
Software
Consulting
Infrastructure
Financing
Revenue
$ 22,617
$ 15,934
$ 10,868
$ 598
Segment Profit
$ 7,335
$ 1,858
$ 2,074
$ 334
Segment Profit Margin
32.4
%
11.7
%
19.1
%
55.9
%
Change YTY Revenue
8.1
%
1.5
%
2.7
%
7.3
%
Change YTY Revenue - Constant Currency
7.0
%
1.2
%
1.9
%
5.7
%
Nine Months Ended September 30, 2025
($ in millions)
Software
Consulting
Infrastructure
Financing
Revenue
$ 20,932
$ 15,706
$ 10,586
$ 557
Segment Profit
$ 6,517
$ 1,807
$ 1,857
$ 371
Segment Profit Margin
31.1
%
11.5
%
17.5
%
66.5
%
INTERNATIONAL BUSINESS MACHINES CORPORATION
U.S. GAAP TO OPERATING (Non-GAAP) RESULTS RECONCILIATION
(Unaudited; $ in millions except per share amounts)
Three Months Ended September 30, 2026
Continuing Operations
GAAP
Acquisition-
Related
Adjustments (1)
Retirement-
Related
Adjustments (2)
Tax
Reform
Impacts
Operating
(Non-
GAAP)
Gross profit
$ 9,714
$ 289
$ —
$ —
$ 10,004
Gross profit margin
56.8
%
1.7
pts
—
pts
—
pts
58.5
%
SG&A
$ 4,620
$ (428)
$ —
$ —
$ 4,193
Other (income) & expense
(109)
0
(91)
—
(200)
Total expense & other (income)
7,217
(418)
(91)
—
6,708
Pre-tax income from continuing operations
2,497
707
91
—
3,295
Pre-tax margin from continuing operations
14.6
%
4.1
pts
0.5
pts
—
pts
19.3
%
Provision for/(benefit from) income taxes (3)
$ 298
$ 166
$ 20
—
$ 483
Effective tax rate
11.9
%
2.5
pts
0.3
pts
—
pts
14.7
%
Income from continuing operations
$ 2,199
$ 542
$ 71
$ —
$ 2,812
Income margin from continuing operations
12.9
%
3.2
pts
0.4
pts
—
pts
16.4
%
Diluted earnings per share: continuing
operations
$ 2.31
$ 0.57
$ 0.07
$ —
$ 2.95
Three Months Ended September 30, 2025
Continuing Operations
GAAP
Acquisition-
Related
Adjustments (1)
Retirement-
Related
Adjustments (2)
Tax
Reform
Impacts
Operating
(Non-
GAAP)
Gross profit
$ 9,360
$ 231
$ —
$ —
$ 9,591
Gross profit margin
57.3
%
1.4
pts
—
pts
—
pts
58.7
%
SG&A
$ 4,748
$ (354)
$ —
$ —
$ 4,394
Other (income) & expense
(173)
(6)
(13)
—
(191)
Total expense & other (income)
6,931
(359)
(13)
—
6,559
Pre-tax income from continuing operations
2,430
590
13
—
3,033
Pre-tax margin from continuing operations
14.9
%
3.6
pts
0.1
pts
—
pts
18.6
%
Provision for/(benefit from) income taxes (3)
$ 686
$ 136
$ 3
$ (309)
$ 516
Effective tax rate
28.2
%
(1.0)
pts
0.0
pts
(10.2)
pts
17.0
%
Income from continuing operations
$ 1,744
$ 454
$ 10
$ 309
$ 2,517
Income margin from continuing operations
10.7
%
2.8
pts
0.1
pts
1.9
pts
15.4
%
Diluted earnings per share: continuing
operations
$ 1.84
$ 0.48
$ 0.01
$ 0.33
$ 2.65
____________________
(1) Includes amortization of acquired intangible assets and acquisition-related charges such as in-process research and development, transaction
costs, applicable retention, restructuring and related expenses, tax charges related to acquisition integration, and pre-closing charges, such as
financing costs.
(2) Includes amortization of prior service costs, interest cost, expected return on plan assets, amortized actuarial gains/losses, the impacts of any plan
curtailments/settlements and pension insolvency costs and other costs.
(3) The tax impact on operating (non-GAAP) pre-tax income from continuing operations is calculated under the same accounting principles applied to
the GAAP pre-tax income.
INTERNATIONAL BUSINESS MACHINES CORPORATION
U.S. GAAP TO OPERATING (Non-GAAP) RESULTS RECONCILIATION
(Unaudited; $ in millions except per share amounts)
Nine Months Ended September 30, 2026
Continuing Operations
GAAP
Acquisition-
Related
Adjustments (1)
Retirement-
Related
Adjustments (2)
Tax
Reform
Impacts
Operating
(Non-
GAAP)
Gross Profit
$ 28,571
$ 813
$ —
$ —
$ 29,384
Gross Profit Margin
56.9
%
1.6
pts
—
pts
—
pts
58.6
%
SG&A
$ 14,691
$ (1,257)
$ —
$ —
$ 13,435
Other (Income) & Expense
(296)
1
(283)
—
(578)
Total Expense & Other (Income)
22,208
(1,256)
(283)
—
20,669
Pre-tax Income from Continuing Operations
6,363
2,069
283
—
8,715
Pre-tax Margin from Continuing Operations
12.7
%
4.1
pts
0.6
pts
—
pts
17.4
%
Provision for/(Benefit from) Income Taxes (3)
$ 782
$ 470
$ 43
$ (6)
$ 1,290
Effective Tax Rate
12.3
%
2.5
pts
0.1
pts
(0.1)
pts
14.8
%
Income from Continuing Operations
$ 5,581
$ 1,598
$ 240
$ 6
$ 7,425
Income Margin from Continuing Operations
11.1
%
3.2
pts
0.5
pts
0.0
pts
14.8
%
Diluted Earnings Per Share: Continuing
Operations
$ 5.86
$ 1.68
$ 0.25
$ 0.01
$ 7.79
Nine Months Ended September 30, 2025
Continuing Operations
GAAP
Acquisition-
Related
Adjustments (1)
Retirement-
Related
Adjustments (2)
Tax
Reform
Impacts
Operating
(Non-
GAAP)
Gross Profit
$ 27,369
$ 657
$ —
$ —
$ 28,025
Gross Profit Margin
57.2
%
1.4
pts
—
pts
—
pts
58.6
%
SG&A
$ 14,661
$ (1,055)
$ —
$ —
$ 13,606
Other (Income) & Expense
(376)
(7)
(61)
—
(444)
Total Expense & Other (Income)
21,184
(1,066)
(61)
—
20,058
Pre-tax Income from Continuing Operations
6,185
1,723
61
—
7,968
Pre-tax Margin from Continuing Operations
12.9
%
3.6
pts
0.1
pts
—
pts
16.7
%
Provision for/(Benefit from) Income Taxes (3)
$ 1,193
$ 396
$ 0
$ (307)
$ 1,282
Effective Tax Rate
19.3
%
0.8
pts
(0.2)
pts
(3.9)
pts
16.1
%
Income from Continuing Operations
$ 4,992
$ 1,326
$ 61
$ 307
$ 6,686
Income Margin from Continuing Operations
10.4
%
2.8
pts
0.1
pts
0.6
pts
14.0
%
Diluted Earnings Per Share: Continuing
Operations
$ 5.27
$ 1.40
$ 0.06
$ 0.32
$ 7.06
____________________
(1) Includes amortization of acquired intangible assets, and acquisition-related charges such as in-process research and development, transaction
costs, applicable retention, restructuring and related expenses, tax charges related to acquisition integration, and pre-closing charges, such as
financing costs.
(2) Includes amortization of prior service costs, interest cost, expected return on plan assets, amortized actuarial gains/losses, the impacts of any plan
curtailments/settlements and pension insolvency costs and other costs.
(3) The tax impact on operating (non-GAAP) pre-tax income from continuing operations is calculated under the same accounting principles applied to
the GAAP pre-tax income.
INTERNATIONAL BUSINESS MACHINES CORPORATION
GAAP OPERATING CASH FLOW TO FREE CASH FLOW RECONCILIATION
(Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
($ in millions)
2026
2025
2026
2025
Net cash provided by operating activities per GAAP
$ 4,025
$ 3,081
$ 11,791
$ 9,153
Less: change in IBM Financing receivables
541
298
2,805
905
Net cash from operating activities excl. IBM Financing receivables
3,484
2,783
8,986
8,248
Capital expenditures, net
(457)
(410)
(1,200)
(1,067)
Free cash flow
$ 3,027
$ 2,373
$ 7,787
$ 7,181
INTERNATIONAL BUSINESS MACHINES CORPORATION
GAAP OPERATING CASH FLOW TO ADJUSTED EBITDA RECONCILIATION
(Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
($ in billions)
2026
2025
2026
2025
Net cash provided by operating activities
$ 4.0
$ 3.1
$ 11.8
$ 9.2
Add:
Net interest expense
0.4
0.3
1.1
0.9
Provision for/(benefit from) income taxes from continuing operations
0.3
0.7
0.8
1.2
Less change in:
Financing receivables
0.5
0.3
2.8
0.9
Net (gain)/loss on divestitures, assets sales and other (1)
0.0
0.0
(0.1)
0.0
Other assets and liabilities/other, net (1,2)
(0.7)
(0.8)
(2.6)
(2.2)
Adjusted EBITDA
$ 4.9
$ 4.6
$ 13.7
$ 12.7
Revenue
$ 17.1
$ 16.3
$ 50.2
$ 47.8
Net cash provided by operating activities margin
23.5 %
18.9 %
23.5 %
19.1 %
Adjusted EBITDA margin
28.7 %
28.0 %
27.2 %
26.5 %
____________________
(1) Reclassified to align with the presentation of similar line items in the Statement of Cash Flows.
(2) Mainly consists of Changes in operating assets and liabilities, net of acquisitions/divestitures in the Statement of Cash Flows chart,
workforce rebalancing charges, non-operating impacts, and corporate (gains) and charges, less the change in Financing receivables.
IBM (IBM.N) finance chief James Kavanaugh on Wednesday said delayed software deals that rattled investors in the last quarter were beginning to close, as the company lifted its forecast for the business and reported better-than-expected third-quarter earnings.
In an interview with Reuters, Kavanaugh said IBM now expects annual software revenue growth of about 7% to 8%, up from 6% to 8% previously. IBM's shares rose about 4% in extended trading.
Here are some more details:
Third-quarter revenue rose 4.7% to $17.10 billion, above analysts' average estimate of $16.82 billion, according to data compiled by LSEG
Adjusted profit came in at $2.95 per share, beating estimates of $2.86 per share
CEO Arvind Krishna had said in July that IBM had "faltered" in adapting to a shift in customer spending from software to data-center infrastructure, triggering its steepest one-day share drop in over a century
Software revenue rose 8.3% to $7.80 billion in the third quarter, topping estimates of $7.62 billion
Within the segment, sales in its hybrid cloud unit grew 11% and transaction processing software revenue rose 9%, rebounding from an unexpected decline last quarter
Kavanaugh said about 25% of the transaction processing revenue came from deals deferred from the second quarter and "the remaining 75% is net new business"
Infrastructure revenue rose 4.2% to $3.71 billion, as 31% growth in distributed infrastructure, which includes servers and storage systems, helped offset weakness in its Z mainframe business
IBM reported a higher third-quarter profit and growing revenue across its software and infrastructure segments, as it looks to prove to investors that its disappointing second-quarter showing was just a blip.
IBM shares climbed in extended trading on Wednesday after the technology vendor reported better-than-predicted third-quarter results.
Here's how the company performed relative to LSEG consensus:
Earnings: $2.95 adjusted vs. $2.86 expectedRevenue: $17.10 billion vs. $16.82 billion expectedIBM's revenue grew about 5% from a year ago, according to a statement. Net income, at $2.19 billion, or $2.30 per share, increased from $1.74 billion, or $1.84 per share, a year ago. Adjusted earnings exclude acquisition-related adjustments.
"Our clients are now deploying 'Super Intelligence' in ways that transform entire operating models, instead of simply addressing narrow or novel problems," IBM CEO Arvind Krishna was quoted as saying in a statement.
With respect to guidance, IBM called for full-year free cash flow to increase by more than $1 billion. The forecast as of July was a bump of approximately $1 billion. IBM still sees 2026 constant-currency revenue growth between 4% and 5%.
In the third quarter, IBM generated $7.80 billion in software revenue, growing 8% and topping the $7.66 billion consensus among analysts polled by StreetAccount.
Read more CNBC tech newsMeta earnings updates: AI spending, ad revenue and stock reactionTesla beats on earnings and sales even as auto revenue declinesIntel hits construction milestone at Ohio chip fab that's at least 5 years behind scheduleInvestors are questioning neoclouds' business model but Nebius says AI computing prices are risingConsulting revenue, at $5.34 billion, was flat and just below StreetAccount's $5.37 billion consensus.
"AI is increasingly embedded in broader transformations our clients are undertaking, representing about 30% of our consulting revenue in the quarter and 35% of our backlog," Jim Kavanaugh, IBM's finance chief, said on a conference call with analysts.
The consulting unit's 27.4% gross margin narrowed from 28.9% in the second quarter.
"We reinvested productivity gains into digital assets, accelerating our transition towards a services as software model to capture the growing AI opportunity," Kavanaugh said.
Infrastructure revenue came to $3.70 billion. That was up 4% and higher than the $3.57 billion consensus from StreetAccount.
The company's adjusted gross margin, at 58.5%, was narrower than the StreetAccount consensus of 59.1%.
During the quarter, IBM said it agreed to buy Boeing and General Motors' HRL Laboratories, formerly known as Hughes Aircraft's research division, for an undisclosed sum.
As of Wednesday's close, IBM stock has come down 15%, while the S&P 500 index has gained 13%.
Executives will discuss the results with analysts on a conference call starting at 5 p.m. ET.
Diversify Advisory Services LLC raised its position in International Business Machines Corporation (NYSE:IBM – Free Report) by 21.0% during the 3rd quarter, according to its most recent disclosure with the Securities and Exchange Commission. The firm owned 63,912 shares of the technology company’s stock after purchasing an additional 11,112 shares during the quarter. Diversify Advisory Services LLC’s holdings in International Business Machines were worth $14,963,000 as of its most recent filing with the Securities and Exchange Commission.
A number of other hedge funds also recently made changes to their positions in the business. BlackRock Inc. bought a new position in International Business Machines in the 2nd quarter worth approximately $21,586,659,000. State Street Corp increased its position in International Business Machines by 2.7% in the 2nd quarter. State Street Corp now owns 56,045,055 shares of the technology company’s stock valued at $15,760,430,000 after acquiring an additional 1,450,562 shares during the period. Bank of America Corp DE raised its stake in International Business Machines by 7.0% during the 1st quarter. Bank of America Corp DE now owns 16,063,653 shares of the technology company’s stock valued at $3,893,669,000 after acquiring an additional 1,049,602 shares in the last quarter. Bank of New York Mellon Corp bought a new stake in International Business Machines during the 2nd quarter valued at $2,606,782,000. Finally, UBS AM a distinct business unit of UBS ASSET MANAGEMENT AMERICAS LLC raised its stake in International Business Machines by 0.7% during the 2nd quarter. UBS AM a distinct business unit of UBS ASSET MANAGEMENT AMERICAS LLC now owns 7,621,512 shares of the technology company’s stock valued at $2,143,245,000 after acquiring an additional 53,388 shares in the last quarter. Institutional investors own 58.96% of the company’s stock.
Insider Buying and Selling at International Business Machines
In other news, SVP Robert Thomas sold 25,000 shares of International Business Machines stock in a transaction that occurred on Wednesday, August 26th. The shares were sold at an average price of $230.32, for a total value of $5,758,000.00. Following the transaction, the senior vice president owned 47,800 shares of the company’s stock, valued at $11,009,296. The trade was a 34.34% decrease in their position. The sale was disclosed in a document filed with the SEC, which is accessible through this link. Company insiders own 0.27% of the company’s stock.
Analyst Ratings Changes
A number of research analysts have issued reports on the company. Oppenheimer lowered International Business Machines from an “outperform” rating to a “market perform” rating in a research report on Wednesday, July 15th. Wall Street Zen lowered International Business Machines from a “hold” rating to a “sell” rating in a report on Saturday, September 12th. Daiwa Securities Group cut their price objective on shares of International Business Machines from $247.00 to $217.00 and set a “neutral” rating on the stock in a research note on Wednesday, July 29th. HSBC cut their price objective on shares of International Business Machines from $175.00 to $174.00 in a research note on Friday, July 24th. Finally, Weiss Ratings raised shares of International Business Machines from a “hold (c+)” rating to a “buy (b-)” rating in a report on Wednesday, October 14th. Twenty research analysts have rated the stock with a Buy rating, twelve have given a Hold rating and two have given a Sell rating to the company. Based on data from MarketBeat, the stock currently has a consensus rating of “Moderate Buy” and an average target price of $255.76.
Get Our Latest Stock Analysis on International Business Machines
Here are the key news stories impacting International Business Machines this week:
Positive Sentiment: Enterprise AI momentum: IBM Ventures invested in Leena AI, whose software automates HR, IT and finance processes through autonomous AI agents. The investment supports IBM’s broader effort to capture enterprise spending as customers move from AI assistants to end-to-end workflow automation. IBM Ventures Invests in Leena AI
Positive Sentiment: Open-source AI infrastructure: IBM and partners including Red Hat, Google Cloud, CoreWeave and NVIDIA introduced llm-d 1.0, a production-focused platform designed to make large-language-model inference more scalable and cost efficient. The project could strengthen IBM’s position in hybrid cloud and enterprise AI deployments. llm-d 1.0 Advances Open, Cost-Efficient AI Inference
Positive Sentiment: Software and cybersecurity support: Analysts point to IBM’s software division—particularly hybrid cloud, automation and Red Hat—as the company’s key growth and profit engine. IBM’s Logiq Consulting acquisition also expands its cybersecurity reach in the U.K. defense and regulated markets. IBM’s Logiq Consulting Acquisition
Neutral Sentiment: Earnings are the immediate catalyst: Options markets imply a potentially large post-earnings move, while investors want evidence that delayed deals closed, software growth accelerated and management’s full-year outlook remains achievable. IBM Q3 Earnings Options Move
Negative Sentiment: Execution concerns remain: IBM’s previous quarter missed revenue expectations, and software growth was reportedly driven largely by acquisitions while organic software revenue was flat. A weak outlook or continued deal deferrals could reverse the current optimism. IBM Reports October 21
International Business Machines Price Performance
NYSE:IBM opened at $242.21 on Wednesday. The company has a quick ratio of 0.74, a current ratio of 0.79 and a debt-to-equity ratio of 1.63. The business’s 50-day moving average price is $232.07 and its 200 day moving average price is $243.58. International Business Machines Corporation has a 52-week low of $199.19 and a 52-week high of $332.46. The firm has a market cap of $228.19 billion, a P/E ratio of 19.68, a PEG ratio of 2.27 and a beta of 0.73.
International Business Machines (NYSE:IBM – Get Free Report) last issued its quarterly earnings results on Wednesday, July 22nd. The technology company reported $2.93 earnings per share for the quarter, meeting analysts’ consensus estimates of $2.93. International Business Machines had a net margin of 15.52% and a return on equity of 35.65%. The company had revenue of $17.16 billion during the quarter, compared to the consensus estimate of $17.46 billion. During the same period in the prior year, the company earned $2.80 EPS. International Business Machines’s revenue was up 1.1% on a year-over-year basis. As a group, sell-side analysts predict that International Business Machines Corporation will post 12.34 earnings per share for the current fiscal year.
International Business Machines Company Profile
(Free Report)
International Business Machines Corporation (NYSE:IBM), commonly known as IBM, is a global technology and consulting company that helps organizations modernize their information technology and business operations. Its offerings include hybrid cloud solutions, artificial intelligence software and services, enterprise software, IT infrastructure, cybersecurity, data analytics, and technology consulting.
IBM provides products and services to businesses, governments, and other institutions across industries and regions worldwide.
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IBM Ventures Invests in Leena AI to Accelerate Agentic AI Across the Enterprise Back OfficePR Newswire
NEW YORK, Oct. 20, 2026
Strategic investment backs Leena AI's AI Colleague platform as enterprises move from AI assistants to autonomous AI agents for HR, IT and Finance operations
, /PRNewswire/ -- Leena AI, the enterprise agentic AI company, today announced a strategic investment from IBM Ventures, the venture capital arm of IBM (NYSE: IBM). The investment will support Leena AI's growth as enterprise demand rises for AI agents that run back-office processes end to end rather than simply answer questions.
Leena AI's AI Colleague platform deploys autonomous AI agents that resolve employee requests, execute multi-step workflows and act across the systems large enterprises already run in HR, IT and Finance, including SAP, Workday, Salesforce, Oracle and ServiceNow. Named a Leader in the Gartner® Magic Quadrant™ for three consecutive years, Leena AI today automates more than 500 global enterprises.
"Enterprises are done experimenting with AI that talks. They want AI that does: agents that own a process, do the job and close the loop inside the systems they already own," said Adit Jain, Co-founder and CEO of Leena AI. "IBM has spent decades earning the trust of the world's largest organizations. Backing from IBM Ventures is a strong signal that agentic AI for the back office is ready for that scale, and we are proud to build toward it with IBM."
IBM Ventures invests in early- and growth-stage companies building the next generation of enterprise technology across AI, security and quantum computing, with a focus on companies whose capabilities complement IBM's portfolio and serve the needs of IBM's global enterprise clients.
"What stood out with Leena AI is its focus on the back office, where agentic AI meets real operational complexity across HR, IT and Finance," said Emily Fontaine, Global Head of IBM Ventures. "Leena AI's approach complements IBM's work in AI orchestration and governance, and we look forward to supporting the team as it scales."
The investment joins Leena AI's existing backers, including Greycroft and Bessemer Venture Partners.
About Leena AI
Leena AI is an enterprise agentic AI company headquartered in New York. Its AI Colleague platform deploys autonomous AI agents that automate business processes across HR, IT and Finance, integrating with the enterprise systems companies already run. Leena AI serves more than 500 enterprises globally. Learn more at leena.ai.
Media contact
Leena AI: Yacob Girma, VP, Strategy, [email protected]
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advanced to $238.95, up approximately 1.08%, at 11:52 a.m. ET on October 20 as investors weighed the release of llm-d 1.0. The open-source project aims to make running AI models at scale more efficient and reliable. For shareholders, the opportunity comes down to one thing: turning better infrastructure into paying customers.
According to IBM's announcement, the release helps multiple customers share computing resources and keeps services operating through planned upgrades. The project now draws on more than 500 contributors across over 25 organizations. That gives it technical reach. IBM's potential payoff lies in demand for supported Red Hat platforms and implementation services, but participation alone does not establish revenue.
The valuation snapshot puts shares 1.83% below the GF Value™ estimate of $243.40, suggesting a modest valuation cushion. The bigger test is execution. Paid deployments, stronger Red Hat growth and sustained software profitability would give investors something concrete to measure. A stronger AI platform opens doors. IBM still has to turn that access into profitable business.
International Business Machines Corporation is poised for a potential breakout if Q3 earnings exceed expectations, with technical and options setups aligning for bullish momentum. Options positioning is neutral, with key resistance at $240 and support at $225; a surprise could drive IBM beyond its typical post-earnings range. Technical indicators, including RSI and price consolidation, support the case for an IBM breakout, potentially targeting $250 and, if momentum persists, up to $290.
Strategic investment backs Leena AI's AI Colleague platform as enterprises move from AI assistants to autonomous AI agents for HR, IT and Finance operations
, /PRNewswire/ -- Leena AI, the enterprise agentic AI company, today announced a strategic investment from IBM Ventures, the venture capital arm of IBM (NYSE: IBM). The investment will support Leena AI's growth as enterprise demand rises for AI agents that run back-office processes end to end rather than simply answer questions.
Leena AI's AI Colleague platform deploys autonomous AI agents that resolve employee requests, execute multi-step workflows and act across the systems large enterprises already run in HR, IT and Finance, including SAP, Workday, Salesforce, Oracle and ServiceNow. Named a Leader in the Gartner® Magic Quadrant™ for three consecutive years, Leena AI today automates more than 500 global enterprises.
"Enterprises are done experimenting with AI that talks. They want AI that does: agents that own a process, do the job and close the loop inside the systems they already own," said Adit Jain, Co-founder and CEO of Leena AI. "IBM has spent decades earning the trust of the world's largest organizations. Backing from IBM Ventures is a strong signal that agentic AI for the back office is ready for that scale, and we are proud to build toward it with IBM."
IBM Ventures invests in early- and growth-stage companies building the next generation of enterprise technology across AI, security and quantum computing, with a focus on companies whose capabilities complement IBM's portfolio and serve the needs of IBM's global enterprise clients.
"What stood out with Leena AI is its focus on the back office, where agentic AI meets real operational complexity across HR, IT and Finance," said Emily Fontaine, Global Head of IBM Ventures. "Leena AI's approach complements IBM's work in AI orchestration and governance, and we look forward to supporting the team as it scales."
The investment joins Leena AI's existing backers, including Greycroft and Bessemer Venture Partners.
About Leena AI
Leena AI is an enterprise agentic AI company headquartered in New York. Its AI Colleague platform deploys autonomous AI agents that automate business processes across HR, IT and Finance, integrating with the enterprise systems companies already run. Leena AI serves more than 500 enterprises globally. Learn more at leena.ai.
Media contact
Leena AI: Yacob Girma, VP, Strategy, [email protected]
llm-d 1.0 consolidates a hardened core for distributed inference validated for day 2 production deployments that helps organizations improve AI serving efficiency and scale enterprise workloads.
llm-d is broadly adopted and trusted by frontier model labs, hyperscalers and neoclouds, hardware accelerators, and major enterprises, with recent demonstrations showing up to five to 10 times cost reductions for context-heavy agentic workloads1 and three times greater output throughput.2
, /PRNewswire/ -- Today, llm-d project contributors announced the release of llm-d 1.0, a major milestone for the open source project designed to help organizations deploy and scale large language model inference more efficiently across modern infrastructure. Founded in 2025 by Red Hat, IBM (NYSE: IBM), Google Cloud, CoreWeave and NVIDIA, and now governed by the Cloud Native Computing Foundation (CNCF), llm-d plays a key role in the open foundation for enterprises deploying AI at scale in production.
As organizations race to put AI into production, many are discovering that running AI at scale can be as challenging and expensive as building the models themselves. Organizations need a way to deliver responsive experiences for users, support agentic workloads, and maximize utilization of increasingly scarce compute resources. llm-d 1.0 is built to address these challenges through intelligent distributed inference capabilities to facilitate improvements in performance, increases in throughput and help organizations gain greater control over the economics of AI serving.
Turning Innovation into Production Reality
With the rise of agentic AI, new types of workloads are placing a different kind of stress on infrastructure systems. Agentic workloads continually access and reuse vast amounts of context while supporting parallel agents that can generate unpredictable bursts of activity. Managing that context often consumes more resources than generating the final output itself, making latency, throughput, memory efficiency and infrastructure costs critical factors in realizing AI ROI. llm-d already delivers hardware heterogeneity and advanced inference capabilities out of the box for complex infrastructure environments, as well as prefix-cache and load-aware routing, KV cache offloading, prefill/decode disaggregation, wide expert parallelism and batch and async inference — across multiple model servers, including vLLM and SGLang.
llm-d 1.0 is engineered to bring that performance to the realities of Day 2 operations and the ongoing work of running inference in production: serving multiple tenants, balancing competing priorities, providing with zero downtime features and supporting emerging agentic workloads, all within one suite of co-designed components that compose into a platform. New capabilities in 1.0 include:
Multi-tenant quality of service — Priority and fairness-aware flow control helps latency-sensitive requests, and bursty agent workloads share a fleet without starving one another.
Zero-downtime operations — Router high availability with hot standby and rolling updates keep traffic flowing through upgrades and planned maintenance. Management of prefill/decode replicas as one logical unit, with coordinated rollouts and lockstep upgrades—making disaggregated serving practical in production.
A stable foundation to build on — A v1 configuration API and a hardened request path, validated across clouds and accelerators, give adopters a release they can standardize on.
Agent-aware serving — Session-aware routing keeps multi-turn conversations close to their cached context, while turn-priority scheduling and native Responses API state support help agents reuse context across turns and reduce recomputation.
The result is infrastructure that can support diverse AI workloads, ranging from latency-sensitive user interactions to large-scale autonomous agent workflows, without forcing organizations to choose between responsiveness and efficiency.
Growing Ecosystem Momentum
llm-d is already being used across a growing ecosystem of model developers, cloud providers, infrastructure vendors and enterprise users. Today, the project includes more than 500 contributors from over 25 organizations collaborating on the future of distributed AI serving and helping build common foundations across the AI infrastructure stack.
Core users including organizations running large-scale distributed inference, frontier model developers optimizing inference stacks and cloud providers serving multi-tenant AI endpoints have all seen measurable benefit from deploying llm-d.
In one recent use case, open frontier models and llm-d enabled IBM Research to explore quantum error correction hardware at 11.5 times lower inference cost than an all-proprietary configuration.3 Researchers reported a prefix-cache hit rate of approximately 98% and a blended serving cost of about $0.11 per million tokens.
In a separate recent demonstration using benchmark workloads, researchers showed that llm-d could efficiently serve large mixture-of-experts models for agentic workloads. Researchers used llm-d to deploy GLM 5.2, an approximately 753-billion-parameter open-weight model, on widely deployed NVIDIA GPUs, demonstrating how enterprises can use existing GPU fleets to serve frontier-class AI at scale. On a workload with hundreds of agentic sessions running in parallel, the deployment delivered over 6.6 million output tokens per minute at peak on agentic benchmarks, serving up to 3,000 concurrent coding agents with zero preemptions. At current cloud rental rates, this deployment led to costs that would have been 5 to 10 times less per token than equivalent commercial API pricing, with the largest savings on the input-heavy traffic patterns typical of agentic workloads, highlighting how llm-d can save resources and costs for enterprises deploying AI in production at scale.4
Through its CNCF governance model and broad industry participation, llm-d aims to accelerate innovation while providing organizations with an open alternative for managing increasingly complex AI infrastructure. Looking to the future, the community will continue adapting to new hardware and models as they emerge, evolving the software stack to achieve peak performance across new architectures. To learn more, read the announcement blogs from IBM and Red Hat.
Supporting Quotes
Chris Aniszczyk, CTO, CNCF
"AI inference is quickly becoming a core cloud native workload. llm-d 1.0 helps organizations meet this shift at scale by bringing together open source inference capabilities with the requirements that matter in scaling production to then meet the demands of agentic workloads. It's an important step toward making high performance open source inference more operationally mature and accessible across the cloud native ecosystem."
Brian Stevens, senior vice president and AI chief technology officer, Red Hat
"As organizations move beyond AI experimentation and into full-scale production, the bottleneck shifts from generating answers to managing the economics, operational reliability, and extreme infrastructure demands of complex agentic workloads. Open source collaboration is essential to solving these day-two operational challenges at scale. With llm-d 1.0, the community is delivering a standardized, hardened core for distributed inference to empower enterprises to optimize hardware performance, address operational costs, and build high-density AI architectures on an open foundation."
Priya Nagpurkar, vice president, AI native systems, IBM Research
"At IBM, we see firsthand that the challenge of enterprise AI is no longer just building powerful models but running them efficiently and reliably at scale. llm-d 1.0 represents an important milestone in creating an open foundation for distributed inference to help organizations get more value from their AI infrastructure and more control on the AI capabilities they depend on. As agentic workloads become more prevalent, open technologies like llm-d will be critical to improving performance, lowering costs, and accelerating innovation across the AI ecosystem."
Mark Lohmeyer, VP & GM, AI & Computing Infrastructure, Google Cloud
"Agentic AI is unlocking tremendous value for enterprises and consumers across a broad range of use-cases. However, as these workloads scale rapidly in production, they place unique demands on the infrastructure and require new approaches to deliver the performance, reliability, and cost-effectiveness our customers need. The release of llm-d 1.0 is an important milestone for the industry to address these needs. As a founding contributor to llm-d, Google Cloud is integrating llm-d 1.0 into Google Kubernetes Engine, and enabling it across our Google TPU and NVIDIA GPU portfolio, enabling customers to scale multi-tenant environments, optimize their inference performance, and dramatically lower their overall serving costs on a hardened, open-source foundation."
Shadi Saba, vice president of engineering, AI/ML at CoreWeave
"Every team running inference at scale hits the same problems: context that often costs more to manage than the output, tenants competing for the same fleet, and upgrades that can't interrupt traffic. llm-d 1.0 gives the community a hardened, open base to solve them once instead of separately. CoreWeave helped found the project, and customers can run llm-d on CoreWeave Kubernetes Service alongside NVIDIA Dynamo, choosing the serving stack that fits their workload."
Ujval Kapasi, vice president, Engineering AI Frameworks, NVIDIA
"The next wave of agentic AI demands inference that delivers performance and efficiency at scale. Bringing llm-d to NVIDIA Vera Rubin will help enterprises build and scale advanced AI applications on the next generation of NVIDIA accelerated infrastructure. Through our collaboration with the llm-d community and contributions from open source NVIDIA Dynamo, we're helping enterprises get more from their AI infrastructure investments."
Phil Guido, executive vice president and chief commercial officer at AMD
"With llm-d v1.0, we are advancing open, high-performance distributed inference on AMD Instinct™ GPUs. Agentic workloads require infrastructure that delivers responsiveness and efficiency. Working with the llm-d community, we're delivering the latest inference innovation on an open foundation, giving developers greater flexibility and choice to deploy AI at scale."
Acyr Locatelli, VP, Modeling, Cohere
"At Cohere, we face the dual challenge of training frontier language models while serving them efficiently at enterprise scale. llm-d helps us optimize for both, whether maximizing throughput for large-scale reinforcement learning workloads or delivering the responsiveness users expect in production. Its flexible, open-source architecture aligns closely with our commitment to sovereign AI, giving organizations greater control over how AI is deployed, operated, and scaled."
Salman Paracha, SVP AI Engineering, DigitalOcean
"DigitalOcean is excited about the llm-d 1.0 release and relies on llm-d as foundational distributed inference software for DigitalOcean Serverless Inference and Managed Agents, serving trillions of tokens. Its Kubernetes-native design and integration with the Kubernetes Gateway API Inference Extensions provide robust orchestration and endpoint picking, while production-proven paths for dynamic flow control, inference-aware load balancing, and prefill/decode disaggregation help us operate reliably at scale. We collaborate closely with the llm-d community, contributing upstream features and feedback, and look forward to the continued development of llm-d."
Vladislav Tankov, Director of AI, JetBrains
"JetBrains has been working with llm-d since its early releases, and it is great to see the project reach 1.0. llm-d now runs in production behind our new Junie Lite plan and serves a significant share of its traffic. Our traffic ranges from long agentic coding sessions to short requests, and predicted latency-based scheduling was straightforward to enable and keeps latency consistent across that mix. Junie Lite brings our AI coding agent to developers at no cost, and llm-d helps make that possible by letting us serve more requests per GPU at lower cost and with faster responses. We have enjoyed working with the llm-d team and congratulate them on this release."
Mathis Felardos, Lucas Fernandes-Martins and Nikhil Thomas (Mistral, Inference Engineers and llm-d contributors)
"Serving frontier models across interactive applications and high-volume APIs means handling steep traffic spikes without letting bursty workloads degrade latency for priority customers. With llm-d's prefix-cache-aware routing, flow control and disaggregated serving support we can enforce strict priority bands across our commercial tiers, automatically holding or shedding lower-priority requests when pools saturate so paid traffic meets our latency SLOs. Mistral is a proud supporter of open-source software, and we will continue to contribute back to llm-d and DisaggregatedSet projects."
Nishchaie Khanna, Sr Director of Engineering, AI Platform, Roblox
"At Roblox, serving large language models efficiently across a mix of cloud and on-premises GPUs is one of our core infrastructure challenges. llm-d gives us a Kubernetes-native foundation for disaggregated serving and cache-aware routing on the hardware we already run, without tying us to a single inference engine. We're excited to build on llm-d 1.0 and to contribute back to the community."
About IBM
IBM is a leading provider of global hybrid cloud and AI, and consulting expertise. We help clients in more than 175 countries capitalize on insights from their data, streamline business processes, reduce costs and gain the competitive edge in their industries. Thousands of governments and corporate entities in critical infrastructure areas such as financial services, telecommunications and healthcare rely on IBM's hybrid cloud platform and Red Hat OpenShift to affect their digital transformations quickly, efficiently and securely. IBM's breakthrough innovations in AI, quantum computing, industry-specific cloud solutions and consulting deliver open and flexible options to our clients. All of this is backed by IBM's long-standing commitment to trust, transparency, responsibility, inclusivity and service. Visit www.ibm.com for more information.
About Red Hat
Red Hat is the open hybrid cloud technology leader, delivering a trusted, consistent and comprehensive foundation for transformative IT innovation and AI applications. Its portfolio of cloud, developer, AI, Linux, automation and application platform technologies enables any application, anywhere—from the datacenter to the edge. As the world's leading provider of enterprise open source software solutions, Red Hat invests in open ecosystems and communities to solve tomorrow's IT challenges. Collaborating with partners and customers, Red Hat helps them build, connect, automate, secure and manage their IT environments, supported by consulting services and award-winning training and certification offerings.
Media contacts:
Ashley Peterson
IBM Communications
[email protected]
Marian Pierson
Red Hat Communications
[email protected]
1 How llm-d makes the most of the hardware you already have
2 Production-Grade LLM Inference at Scale with KServe, llm-d, and vLLM
3 Highly Cost-Efficient Agent Factories for High-Level Synthesis: Design Space Exploration for Quantum Error Correction Chip with Open Frontier Models and Distributed Inference at Scale
4 How llm-d makes the most of the hardware you already have
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Ahead of IBM Corp. (IBM) earnings Tuesday, Kim Forrest expects the legacy tech firm to face a tough road due to difficulties around large-scale tech deployments. She adds that the field of quantum computing, which IBM has plenty of exposure to, is greatly misunderstood.
