Prabhu RamIBM posted its strongest quarter in years, with Q3 revenue up 7% YoY to $16.3 Bn — the biggest jump in several cycles — driven by broad-based acceleration across Software and Infrastructure.
The company has transitioned from transformation to sustained acceleration, with AI, automation, and hybrid cloud now anchoring its long-term growth strategy.
What’s Working
Software grew 9%, fueled by 22% Automation gains and deeper integration with HashiCorp. Red Hat bookings rose nearly 20%, helping lift software margins by about 270 bps.
Infrastructure surged 15%, marking IBM’s best third quarter in nearly two decades. The new z17 mainframe is driving both scale and profitability, with margins expanding by roughly 420 bps.
Consulting returned to growth at +2%, supported by $1.5 Bn in GenAI signings and 200 bps in margin expansion — its strongest showing in three years.
Why It Matters
AI has become the center of IBM’s operating and growth engine. Its GenAI book of business now exceeds $9.5 Bn, while the internal Client Zero initiative has delivered $4.5 Bn in annualized savings through AI-led automation.
This dual impact — AI as both a revenue accelerator and productivity driver — underscores IBM’s renewed competitive edge.
What to Watch
IBM’s next phase will test the scalability of this momentum: expanding GenAI-led consulting engagements, sustaining z17 adoption for AI workloads, and executing on quantum and ecosystem partnerships with Anthropic, Groq, and HashiCorp.
IBM’s Q3 results show a company that has shifted gears — from reinvention to acceleration — turning AI from promise into performance.
