IBM posts 5% sales growth that tops estimates, says infrastructure deals came back

Its closely-watched software unit grows 8.3% to US$7.8 billion, ahead of Wall Street expectations

Published Thu, Oct 22, 2026 · 06:45 AM

Some two-thirds of IBM’s mainframe and associated software deals that slipped earlier in 2026 have since been inked, CFO Jim Kavanaugh said. PHOTO: REUTERS

[SAN FRANCISCO] International Business Machines (IBM) reported sales that topped analysts’ estimates, saying it had recovered most of the infrastructure deals that were delayed earlier in 2026.

Sales increased about 5 per cent to US$17.1 billion in the quarter ended Sep 30, the company said on Wednesday (Oct 21) in a statement.

IBM’s infrastructure unit, which includes mainframe servers, expanded 4 per cent to US$3.7 billion. Both were ahead of analysts’ average projections, according to data compiled by Bloomberg.

About two-thirds of the mainframe and associated software deals that slipped earlier in 2026 have since been inked, chief financial officer Jim Kavanaugh said in an interview.

In July, IBM said that customers were temporarily shifting their spending to chips and servers amid artificial intelligence-fuelled shortages, harming its mainframe and software units.

This fuelled panic among investors already concerned that AI tools will disrupt many software incumbents and sent the shares down 25 per cent, the worst day since at least 1968.

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IBM’s closely-watched software unit expanded 8.3 per cent to US$7.8 billion, ahead of the US$7.64 billion anticipated by Wall Street.

Big Blue has sought to refashion itself as a high-growth software company through major acquisitions of Red Hat, HashiCorp and Confluent.

For the full year, the company now expects free cash flow to increase by more than US$1 billion. Previously, it expected about US$1 billion. Profit, excluding some items, was US$2.95 a share in the third quarter, compared with the average estimate of US$2.86.