IBM posted better-than-expected third-quarter earnings, but its stock fell as investors focused on slowing growth in its cloud business. The hybrid cloud segment, led by Red Hat, grew 14%, down from 16% the previous quarter, sparking concerns about IBM’s momentum in cloud computing.
Total revenue rose to $16.33 billion, topping estimates, while the company’s infrastructure unit — home to its AI-driven mainframe — surged 17% to $3.56 billion. The new mainframe has seen strong uptake in the financial sector, enabling institutions to apply AI within strict data protection frameworks.
CEO Arvind Krishna projected a recovery in cloud growth by 2026, while CFO Jim Kavanaugh highlighted IBM’s expanding $9.5 billion AI business. Despite the slowdown in Red Hat, analysts said the company’s performance remains robust, supported by AI innovation and an upgraded revenue forecast of more than 5% annual growth.
