International Business Machines (IBM) has been a participant in the AI-driven rally in tech stocks. For the year, IBM stock has trended higher by almost 40%.
With the recent earnings beat and a positive outlook for Q4 2025, IBM stock is likely to maintain the bullish momentum. Amidst this background, IBM has also announced that it will be cutting thousands of jobs in Q4.
However, this is unlikely to impact the company’s growth, as the job cuts are in sync with the industry trend of improving productivity and increasing reliance on AI tools. As markets continue to focus on improving financials, IBM looks attractive.
IBM is a provider of services and solutions globally in the software, consulting, and infrastructure segments. In the dynamic world of technology, the company has made inroads in the AI, cloud, and quantum computing businesses. IBM remains high on R&D with 19 research facilities across six continents.
For Q3 2025, IBM reported revenue growth of 9% on a year-on-year (YoY) basis to $16.3 billion. Further, with the AI business gaining traction, IBM has guided for full-year revenue growth exceeding 5%.
Amidst these positive developments, IBM stock has trended higher by 20% in the last six months.
IBM delivered a double beat for Q3 2025 on the revenue and earnings per share front. Revenue increased by 7% on a YoY basis to $16.3 billion. Further, EPS growth (operating) was robust at 15%. Healthy growth was attributed to innovation coupled with a diversified portfolio.
Besides the headline numbers, there are three important points to note:
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IBM has guided for full-year free cash flows of $14 billion. This provides the company with high flexibility for innovation, dividends, and potential acquisitions. In October, IBM acquired Txture to boost its cloud services. It’s worth adding here that IBM closed Q3 2025 with cash and equivalents of $14.9 billion.
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The company ended Q3 with an AI book of business at more than $9.5 billion. This is a good indicator of the AI momentum accelerating and is likely to translate into healthy top-line growth.
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Besides the highest revenue growth in several years, IBM reported sequential acceleration across segments. Further, revenue growth for the Americas and EMEA was 9% on a YoY basis. While Asia Pacific reported flat YoY numbers, the region holds potential to be a growth catalyst.
