IBM(US:IBM) Hua Er Jie Jian Wen·2025-10-22 21:47Core Insights - IBM's latest earnings report shows that while free cash flow exceeded expectations, the slowdown in Red Hat's growth has raised deep concerns in the market [1][4][5] Financial Performance - Total revenue for Q3 reached $16.3 billion, a year-over-year increase of 9.1%, with adjusted earnings per share at $2.65, surpassing analyst expectations of $2.41 [4] - The hybrid cloud segment, which includes Red Hat, saw revenue growth of 14%, falling short of the previous quarter's growth and below the analyst forecast of 16%, raising doubts about IBM's growth engine [4][5] - AI business orders have accumulated to $9.5 billion since mid-2023, but 80% of these orders come from the lower-margin consulting segment, with only 20% from the software segment [7][8] Red Hat's Performance - Red Hat is considered a core pillar of CEO Arvind Krishna's strategy to make software IBM's largest business segment, especially as the consulting segment faces challenges due to economic concerns [5] - The mixed cloud segment's revenue growth of 14% appears strong but is a significant slowdown compared to the previous quarter and below analyst expectations [5][6] Consulting and Software Segments - Consulting revenue grew by only 3.3% to $5.32 billion, just meeting expectations, indicating a lack of robust growth [9] - In contrast, the software segment's revenue increased by 10% to $7.21 billion, meeting expectations but lacking excitement [10] Infrastructure Performance - The infrastructure segment's revenue surged by 17% to $3.56 billion, primarily driven by sales of the new z17 mainframe servers, although this growth is considered cyclical and its sustainability is questioned [10]