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Analysts parse IBM earnings, see weakness, stock slides

IBM is on track for its worst trading day in months.

10/23/25 11:00AM

After reporting results Wednesday, IBM is on track for its worst trading day since... well, the last time it reported earnings back in July, as analysts comb through the numbers and raise their collective eyebrow at a couple of different issues.

They highlighted sluggish growth in the company’s transaction processing business — where IBM software is run directly on the mainframe systems used in high-security, high-transaction industries like airlines and banking.

They also called out softness in the company’s hybrid cloud business, built around IBM’s roughly $35 billion purchase of Red Hat in 2019. Companies using the hybrid cloud can connect systems hosted on the public cloud and on-site mainframes. But the results spotlighted a slowdown in actual revenue-generating usage, or consumption, of IBM’s hybrid cloud services by clients.

Here’s some of what analysts are saying:

Bank of America: “Transaction processing declined 3% in constant currency due to customers continuing to prioritize hardware spend over software, but transaction processing should reaccelerate as we move through the mainframe cycle.”

Evercore ISI: “The big question on the print was the deceleration in Red Hat (+12%) vs. expectations for mid-teens growth.”

BMO Capital: “We thought IBM’s quarter was reasonable, including better Software growth helped by HashiCorp, a return to growth in Consulting, and solid margins/free cash flow, though Red Hat and transaction processing were disappointing, which we think could drive near-term consolidation in the shares.”

RBC Capital: “The focus remains around Red Hat which decelerated growing 14%, 12% [in constant currency] compared to 16%, 14% [constant currency] last quarter as management noted consumption headwinds.”

BNP Paribas: “Software growth of 9% [constant currency] fell short of cons. for the second straight quarter. Red Hat guidance also seemed to soften, now expected to accelerate to ‘low-end’ of mid-teens growth.”

Bernstein Research: “Red Hat deceleration appears to have been a worry driving shares down post market close, however the company showed strong bookings growth and confidence that this will help bring Red Hat back to mid-teens YoY growth. Transaction Processing was also weak due to (according to IBM) customers focusing more on mainframe IBM Z.”

Morgan Stanley: “Software growth accelerated as we previewed, but RedHat and TP — which collectively represent 53% of Software revenue — missed expectations again. Furthermore, we estimate organic Software growth in 3Q was just 5% Y/Y, below our 6% Y/Y forecast and management’s 7% target model. Lastly, for the first time in 12 quarters, gross margins missed expectations, a surprise to us.”

Tasha Matsumoto

Stocks rebound as the price of oil retreats

Every sector traded higher, with tech leading gains on increased optimism that tankers will be able to pass through the Strait of Hormuz.

Luke Kawa

Nvidia briefly spikes after Jensen Huang sees at least $1 trillion in AI chip sales through 2027

The stock then gave it all up and then some.

Luke Kawa8h

Oil’s retreat propels US stocks higher

Front-month West Texas Intermediate futures are down more than 4%, while Brent futures are off more than 2% as of 1:25 p.m. ET as traders glom on to some optimistic signs about the flow of oil through the all-important Strait of Hormuz:

A Pakistani-owned tanker passed through the strait this weekend while broadcasting its signal, per Reuters, “indicating ‌that some countries are able to negotiate safe passage for their vessels despite the U.S.-Israeli war on Iran.”
US President Donald Trump said that some “fairly local” countries would soon be helping ships traverse the strait (while having added that other countries are “not enthusiastic” about the prospect of participating).

First non-Iranian cargo transits Strait of Hormuz with AIS on

The Aframax tanker Karachi, carrying Abu Dhabi’s Das crude, has become the first non-Iranian cargo to transit the chokepoint while broadcasting its AIS signal, suggesting that select shipments may be receiving… pic.twitter.com/Q6j6W3Cxz3
— MarineTraffic (@MarineTraffic) March 16, 2026

The SPDR S&P 500 ETF and Invesco QQQ Trust are both up over 1% amid oil’s retreat.

That being said, the news flow is far from universally positive.

Reuters reports that the UAE’s crude output has been cut in half since the Mideast conflict started; Bloomberg says Kuwait’s production has suffered a similar decline.

Trump urges allies to help reopen Strait of Hormuz as tanker traffic nearly vanishes

A Pakistani-owned tanker passed through the strait this weekend while broadcasting its signal, per Reuters, “indicating ‌that some countries are able to negotiate safe passage for their vessels despite the U.S.-Israeli war on Iran.”
US President Donald Trump said that some “fairly local” countries would soon be helping ships traverse the strait (while having added that other countries are “not enthusiastic” about the prospect of participating).

First non-Iranian cargo transits Strait of Hormuz with AIS on

The Aframax tanker Karachi, carrying Abu Dhabi’s Das crude, has become the first non-Iranian cargo to transit the chokepoint while broadcasting its AIS signal, suggesting that select shipments may be receiving… pic.twitter.com/Q6j6W3Cxz3
— MarineTraffic (@MarineTraffic) March 16, 2026

The SPDR S&P 500 ETF and Invesco QQQ Trust are both up over 1% amid oil’s retreat.

That being said, the news flow is far from universally positive.

Reuters reports that the UAE’s crude output has been cut in half since the Mideast conflict started; Bloomberg says Kuwait’s production has suffered a similar decline.

Matt Phillips8h

Sandisk and memory stocks rip ahead of Nvidia CEO’s speech

Memory stocks such as Sandisk, Micron, and disk drive makers Western Digital and Seagate sprinted ahead Monday, as this week’s big AI conference for tech bellwether Nvidia gets underway with a speech from the CEO slated for this afternoon.

As Luke Kawa pointed out earlier, CEO Jensen Huang’s speechifying at high-profile company announcements or industry events hasn’t always been a good thing for Nvidia shares. (The chip designer is holding its GPU Technology Conference, or GTC, this week.)

But Huang’s pronouncements have, at times, been pretty dang helpful for share prices of some companies in the orbit of the AI gods. Perhaps foremost among them are the memory stocks that have blasted toward the top of the S&P 500 in terms of price performance in recent years.

Case in point: the nearly 30% gain that Sandisk posted on January 6, the day after Huang’s keynote speech at the Consumer Electronics Show in Las Vegas, in which he spotlighted memory as a key bottleneck constraining the AI build-out. (Fellow memory plays Western Digital, Seagate Technology Holdings, and Micron also posted double-digit gains that day.)

Memory stocks have been the highest-profile outlet for bullish AI industry impulses this year, and notable comments from Huang could put the wind back in their sails after they had slowed in recent weeks.

Of course, there are also other things happening in the sector, such as Micron’s announcement Sunday that it completed an acquisition of a new manufacturing site in Taiwan.

Either way, memory stocks are pushing higher after having exhaled a bit lately.

What Wall Street’s looking for from Jensen Huang’s keynote GTC address

Of course, there are also other things happening in the sector, such as Micron’s announcement Sunday that it completed an acquisition of a new manufacturing site in Taiwan.

Either way, memory stocks are pushing higher after having exhaled a bit lately.

Luke Kawa

11h

What Wall Street’s looking for from Jensen Huang’s keynote GTC address

GTC may stand for GPU Technology Conference, but investors are looking for Nvidia to go beyond GPUs.