IBM Q3: Revenue Up 9%, Red Hat Growth Slows

IBM beat third-quarter expectations with adjusted EPS of $2.65 and revenue of $16.33 billion, about 9% year‑over‑year, and reported stronger free cash flow and net income versus a year earlier. The company raised full‑year guidance, targeting constant‑currency revenue growth above 5% and reiterating free‑cash‑flow guidance near $14 billion. Shares fell roughly 4–7% as investors focused on slowing Red Hat/hybrid‑cloud growth, which decelerated to about 14% from 16%, alongside softer software organic growth and declines in transaction‑processing platforms. Infrastructure and mainframe businesses were a bright spot, with infrastructure revenue up about 17%, and IBM said its AI “book” of business exceeds $9.5 billion. Analysts were mixed on the outlook — some see recovery potential while Stifel cut its price target to $295 — and some investors have flagged IBM as a potential national‑security/quantum‑technology play amid recent policy shifts.