IBM Shares Fall Despite Q3 Beat as CEO Flags Scrutiny of Enterprise AI Spending

International Business Machines (IBM) shares declined Thursday after CEO Arvind Krishna said enterprise customers are growing more cautious about AI spending, overshadowing a third-quarter earnings beat reported on Oct. 21. Krishna said on the earnings call that clients are "a lot more cognizant" of the true ROI of AI spending and worried about budgets "completely out of control with no real return." He cast the scrutiny as a tailwind, urging companies to scale a few initiatives rather than fund "100 little experiments." IBM posted revenue of $17.1 billion, up 5% year over year and above the $16.8 billion consensus. Adjusted EPS reached $2.95, beating estimates of $2.87, and net income rose 25.6%. Software revenue grew 8%, infrastructure 4%, while consulting was flat. IBM kept its full-year 2026 constant-currency revenue growth outlook of 4% to 5% but raised free cash flow guidance to an increase of more than $1 billion. The stock has fallen 12.3% over the past year, versus a 14.4% gain for the S&P 500 ($SPX).