IBM announced third-quarter financial results that exceeded consensus forecasts, prompting stock gains in extended trading. The company’s revenue increased roughly 5% compared to the prior year, while net income climbed to $2.19 billion, or $2.30 per share, up from $1.74 billion, or $1.84 per share, in the year-earlier period.
Breaking down performance by segment, IBM’s software division generated $7.80 billion in revenue during the quarter, marking 8% growth and surpassing the $7.66 billion consensus estimate. Infrastructure revenue totaled $3.70 billion, up 4% and exceeding the consensus projection of $3.57 billion. Consulting revenue came in at $5.34 billion but remained flat and slightly below the $5.37 billion consensus forecast. The company’s adjusted gross margin reached 58.5%, trailing the 59.1% consensus expectation.
Regarding future outlook, IBM raised its full-year free cash flow forecast to an increase of more than $1 billion, up from the prior guidance of approximately $1 billion issued as of July. The company maintained its 2026 constant-currency revenue growth guidance within a range of 4% to 5%.
Chief Executive Officer Arvind Krishna highlighted client adoption of artificial intelligence solutions, noting that organizations are now implementing these technologies across broader operational transformations rather than for isolated applications. Additionally, IBM announced an acquisition of HRL Laboratories, jointly owned by Boeing and General Motors and formerly known as Hughes Aircraft’s research division, for an undisclosed purchase price.
Year-to-date performance shows IBM stock declining 15% as of Wednesday’s market close, while the S&P 500 index has advanced 13% over the same period.
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