Shares of IBM are down 5% after the technology giant reported mixed financial results for this year’s third quarter.
The hardware and software provider announced earnings per share (EPS) of $2.30 U.S., which topped the consensus expectation of analysts that called for $2.23 U.S.
However, revenue in the July through September period of $14.97 billion U.S. fell short of the $15.07 billion U.S. expected on Wall Street. Sales were up 1.5% from a year earlier.
IBM’s software revenue rose 10% year-over-year in Q3 to $6.52 billion U.S., and its revenue from Red Hat, a 2019 acquisition, grew 14% from a year ago in the quarter.
Overall, software had a gross margin of 83%, higher than any other business segment.
However, those gains were partly offset by consulting revenue that declined 0.5% and infrastructure revenue that fell 7% during the period.
Management at IBM said that they now have a generative artificial intelligence (A.I.) business of more than $3 billion U.S., up more than $1 billion U.S. from this year’s second quarter.
In terms of guidance, IBM said that for the current fourth quarter it expects revenue growth of about 2% at constant currency rates.
The company reiterated its target of more than $12 billion U.S. in 2024 free cash flow.
Prior to today (Oct. 24), IBM stock had risen 44% this year to trade at $232.75 U.S. per share.