International Business Machines (NYSE:IBM) Posts Quarterly Earnings Results, Beats Estimates By $0.10 EPS

International Business Machines (NYSE:IBM) issued its quarterly earnings data on Wednesday. The technology company reported $2.95 earnings per share for the quarter, beating analysts’ consensus estimates of $2.85 by $0.10, FiscalAI reports. The company had revenue of $17.10 billion for the quarter, compared to the consensus estimate of $16.82 billion. International Business Machines had a return on equity of 35.65% and a net margin of 15.52%. The firm’s revenue for the quarter was up 4.7% compared to the same quarter last year. During the same quarter last year, the company earned $2.65 earnings per share.

Here are the key takeaways from International Business Machines’ conference call:

• Q3 performance exceeded expectations: Revenue grew 6%, operating pre-tax margin expanded 70 basis points, operating EPS increased 11%, and free cash flow reached approximately $8 billion through nine months, up 8% year over year.
• Software momentum accelerated: Software revenue rose 9%, with Red Hat up 11%, OpenShift ARR growth above 30%, data up 20%, and transaction processing up 10% as previously deferred deals closed and new business improved.
• Infrastructure demand remained strong: Infrastructure revenue increased 5%, led by 32% growth in distributed infrastructure and record storage growth, while the z17 mainframe cycle generated more than $1 billion of incremental revenue versus prior programs.
• IBM raised its cash-flow outlook: The company maintained its 2026 revenue-growth target of 4%–5% but increased its expected year-over-year free cash flow growth to more than $1 billion and now expects full-year software growth of approximately 7%–8%.
• Enterprise AI and quantum remain major strategic bets: IBM highlighted growing demand for secure, sovereign, and cost-efficient AI deployments, along with progress in quantum hardware and 16 enterprise engagements, though both opportunities remain dependent on longer-term adoption and execution.

International Business Machines Stock Up 3.6%

Shares of IBM opened at $250.67 on Thursday. 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 company has a market capitalization of $236.16 billion, a PE ratio of 22.24, a price-to-earnings-growth ratio of 2.32 and a beta of 0.73. The stock has a fifty day simple moving average of $232.36 and a two-hundred day simple moving average of $243.60. International Business Machines has a 52-week low of $199.19 and a 52-week high of $332.46.

International Business Machines Dividend Announcement

The business also recently disclosed a quarterly dividend, which will be paid on Thursday, December 10th. Shareholders of record on Tuesday, November 10th will be paid a dividend of $1.69 per share. The ex-dividend date of this dividend is Tuesday, November 10th. This represents a $6.76 dividend on an annualized basis and a yield of 2.7%. International Business Machines’s payout ratio is 59.98%.

Insider Activity at International Business Machines

In other International Business Machines news, SVP Robert Thomas sold 25,000 shares of International Business Machines stock in a transaction dated Wednesday, August 26th. The shares were sold at an average price of $230.32, for a total transaction of $5,758,000.00. Following the completion of the sale, the senior vice president directly owned 47,800 shares in the company, valued at $11,009,296. This trade represents a 34.34% decrease in their ownership of the stock. The sale was disclosed in a legal filing with the Securities & Exchange Commission, which is available at the SEC website. 0.27% of the stock is currently owned by company insiders.

More International Business Machines News

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 the $2.85 consensus and revenue of $17.1 billion versus estimates of $16.82 billion. Revenue increased 4.7% year over year, while net income rose to $2.2 billion. IBM beats on top and bottom lines
• Positive Sentiment: Software and infrastructure returned to growth. Software revenue rose about 8% to $7.8 billion and infrastructure revenue increased 4% to $3.7 billion, suggesting delayed customer deals began closing. IBM also raised its full-year software outlook. IBM raises annual software revenue outlook
• Positive Sentiment: Cash-flow expectations improved. IBM raised its full-year free-cash-flow outlook, expecting growth of more than $1 billion from the prior year. Quarterly free cash flow reached $3.0 billion, up approximately $700 million year over year. The board also declared a $1.69 quarterly dividend, equivalent to $6.76 annually and a yield of roughly 2.7%. IBM Q3 revenue rises to $17.1 billion
• Neutral Sentiment: IBM maintained its forecast for full-year constant-currency revenue growth of 4% to 5%, indicating improving execution but not a major acceleration in overall growth.
• Negative Sentiment: AI commentary triggered the reversal. CEO Arvind Krishna said open-weight AI models can deliver roughly 90% of frontier-model performance at about 10% of the cost. Investors interpreted the comments as evidence that AI capabilities may become commoditized, potentially limiting pricing power and returns across the AI ecosystem. IBM CEO discusses open AI models
• Negative Sentiment: Investors were also unsettled by a narrower-than-expected gross margin and the possibility that strong headline results do not translate into faster earnings growth. Shares therefore reversed their initial post-earnings increase and traded lower in premarket activity. IBM earnings reversal

Wall Street Analyst Weigh In

A number of analysts recently commented on IBM shares. Sanford C. Bernstein lowered their target price on shares of International Business Machines from $280.00 to $230.00 and set a “market perform” rating for the company in a research note on Thursday, July 23rd. BMO Capital Markets lowered their target price on shares of International Business Machines from $270.00 to $230.00 and set a “market perform” rating on the stock in a research note on Thursday, July 23rd. Oppenheimer cut shares of International Business Machines from an “outperform” rating to a “market perform” rating in a research note on Wednesday, July 15th. Bank of America reduced their price objective on shares of International Business Machines from $330.00 to $280.00 and set a “buy” rating for the company in a research report on Wednesday, July 15th. Finally, Daiwa Securities Group dropped their target price on shares of International Business Machines from $247.00 to $217.00 and set a “neutral” rating on the stock in a research report on Wednesday, July 29th. Twenty investment 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 MarketBeat, the stock has a consensus rating of “Moderate Buy” and an average price target of $258.36.

International Business Machines Company Profile

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.