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IBM shares fell 7% to $233.50 in morning trading even though its third-quarter 2026 results beat forecasts, with revenue of $17.1 billion and adjusted EPS of $2.95. Investors were disappointed that IBM kept its full-year constant-currency revenue growth forecast at 4% to 5%. CEO Arvind Krishna warned that customers are increasingly scrutinizing the true ROI of AI spending, and that some AI spending is out of control with no real return. IBM Z mainframe revenue fell 20% and consulting grew just 0.2%, while Accenture and Infosys declined by much less, suggesting the damage is mostly concentrated at IBM. Total debt reached $63.8 billion, up $2.6 billion year to date.
- Big Blue's Wild Wednesday Ride: IBM Crushes Q3 Earnings, So Why Did the Stock Tank Mid-Call?
IBM reported third-quarter revenue of $17.1 billion, above the $16.8 billion consensus, and adjusted earnings of $2.95 per share versus the $2.86 estimate, with sales up 5.9% and earnings up 11% year over year. The stock rose as much as 7.3% in after-hours trading, but reversed sharply after CEO Arvind Krishna said corporate clients are worried some AI spending is completely out of control with no real return. The article adds that Tesla's forecast hinting at cooler data center capital expenditures weighed on AI investors, and Nvidia, Oracle and CoreWeave also began falling around 6:00 p.m. ET, when the call ended.
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In this Yahoo Finance segment, Brian Sozzi highlights Meta (META) unveiling a new class of stock that could serve as a blueprint for other hyperscalers, the view that investors are overlooking Tesla's (TSLA) vehicle, and bearish sentiment around CoreWeave (CRWV). He then interviews P&G CFO Andre Schulten about encouraging growth and whether everyday product use has hurt the company with consumers.
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