Summary: The Strategic Pivot is Funded
IBM just delivered a decisive Q3 2025, validating our thesis that the enterprise technology giant is successfully executing its high-margin pivot. These results are not just a beat; they are confirmation that the company is effectively leveraging cyclical strength to fund its strategic future.
Revenue reached a solid $16.33 billion, marking a strong 9.1% YoY increase. This growth was fundamentally high-quality, anchored by stellar performance in the high-margin core: Software surged 10% and Hybrid Cloud accelerated 14%.
The financial story was magnified by the 61% surge in IBM Z Mainframe infrastructure—a massive, temporary cash tailwind that is paying for the transition. Most importantly, the company’s strategic future is clear: the AI book of business now exceeds $9.5 billion. Given this operational excellence, IBM confidently raised its full-year guidance for both revenue and Free Cash Flow. IBM is a capital-disciplined enterprise expertly converting its deeply sticky client base into profitable, modern consumption of AI and Hybrid Cloud solutions.
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