Core Insights - IBM reported third-quarter results that exceeded Wall Street estimates, driven by ongoing artificial intelligence tailwinds, but the stock dropped 5% in extended trading [1] - The company raised its revenue guidance, now expecting more than 5% revenue growth, and projected free cash flow for the year to reach $14 billion [2] Financial Performance - Revenue increased by 9% to approximately $16.33 billion compared to about $15 billion in the same period last year [1][5] - Net income was reported at $1.74 billion, or $1.84 per share, a significant recovery from a loss of $330 million, or 36 cents per share, a year earlier [1] - Earnings per share were adjusted to $2.65, surpassing the expected $2.45 [5] Business Segments - IBM's AI book of business has grown to over $9.5 billion, up from $7.5 billion in the previous quarter [3] - Software revenue rose by 10% to $7.21 billion, meeting market estimates, while consulting revenue totaled $5.3 billion, exceeding projections [3] - Infrastructure revenue, which includes mainframe computers, increased by 17% to $3.6 billion [4] Dividends - The board approved a quarterly dividend of $1.68 per share [4]

Group 1 - Trade tariffs are significantly impacting the global economy in 2025, with the Trump administration imposing double-digit import fees on goods from most countries, particularly affecting markets like China and India [1] - IBM operates extensively on a global scale, with research labs on six continents and more employees in India than in the United States, generating nearly half of its revenues from the Americas in 2024 [2][3] - Despite the ongoing trade tensions and tariff policies, IBM is not overly concerned, as the company has strategically diversified its supply chain, with imported goods accounting for less than 5% of its overall spending [6][8] Group 2 - IBM's minimal exposure to tariffs means that the financial impact is limited to under 1% of total revenues, even with the complexities of current tariff rates [8] - The company is actively seeking alternative suppliers for components affected by tariffs, although the overall financial impact remains relatively small [8] - Even if tariffs were to increase significantly, the manageable costs would not pose a substantial threat to IBM's financial health, as the cost of products and services accounted for only 16.3% of total revenues last year [9]