International Business Machines Corp. delivered third-quarter results that topped Wall Street forecasts, but the stock's reaction was uneven in extended trading. IBM reported adjusted earnings of $2.95 per share on $17.1 billion in revenue, beating analyst expectations of about $2.85 to $2.86 per share and roughly $16.8 billion in revenue. Revenue rose 4.7% from a year earlier, with software revenue climbing 8% to $7.8 billion and infrastructure revenue rising 4% to about $3.7 billion. Consulting revenue was essentially flat at $5.34 billion, slightly below the $5.37 billion consensus.
The company also raised its full-year free cash flow outlook, now projecting growth of more than $1 billion, compared with a prior forecast of about $1 billion. IBM maintained its constant-currency revenue growth guidance of 4% to 5% for 2026. Chief Financial Officer Jim Kavanaugh said artificial intelligence accounts for about 30% of consulting revenue and 35% of the consulting backlog. Net income rose to $2.19 billion, or $2.30 per share, from $1.74 billion, or $1.84 per share, a year ago.
IBM stock closed up about 4% at $251.50 on Wednesday, then initially traded near $255 after hours. However, later reports indicated the shares reversed those gains and fell as much as 5% in after-hours trading. Investors remain cautious after IBM's July 14 pre-announcement of weak second-quarter results triggered a 25% single-day drop, the stock's worst session on record. About two-thirds of delayed mainframe deals closed during the third quarter. IBM also agreed to acquire HRL Laboratories from Boeing and General Motors and advanced to the final phase of a federal quantum benchmarking program. The stock remains down about 15% year to date, while the S&P 500 has gained about 13%.
