IBM shares climbed in Wednesday's regular session, settling up 3.94% to $251.46 from $241.92, after the technology and consulting giant beat Wall Street's third-quarter expectations. Revenue rose 4.7% year over year to $17.1 billion, while non-GAAP profit of $2.95 per share came in 2.7% above analysts' consensus estimates. The company also raised its full-year free-cash-flow outlook, a signal that management sees the business on firmer footing than it did earlier in the year.
The quarter's details pointed to broad-based strength: software revenue increased 8% year over year to $7.8 billion, and Transaction Processing swung back to 9% growth after declining 8% in the second quarter. CEO Arvind Krishna told investors that "Q2 softness was timing rather than demand," pointing to rising infrastructure momentum as delayed contracts came back online. Even so, reporting on the after-hours session described a volatile stretch in which the stock initially extended its gains before reversing by more than 5% as commentary during the call rattled sentiment across AI-linked names, a reminder that the market is parsing IBM's forward commentary as closely as its headline numbers.
The print caps a stretch in which IBM shares are up 10.35% over the last five trading days and 4.80% over the last 30, pulling the stock further from its 52-week low of $199.19 but still well short of its 52-week high of $332.46. Heading into the report, the average analyst price target stood at $259.76, with Morgan Stanley among those raising its target, to $238.00, ahead of the print.
The next test for IBM is whether the software and infrastructure acceleration seen this quarter can hold up through 2027, a question that reporting flagged as the real swing factor now that the easy comparison to a soft second quarter is behind the company. How the stock settles once the post-earnings volatility clears will say as much about investor conviction in that recovery as the print itself.