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IBM (IBM): Sovereign AI Racks, Thawed Deals & Quantum Cash [Q3 2026]

10m | Oct 22, 2026

IBM closed two-thirds of its stranded Q2 software contracts and posted its highest nine-month free cash flow margin in history, yet Q3 2026 shares faded as management refused to raise the full-year revenue guide.


In ~10 minutes:

- Two-thirds of Q2's $400M slipped software deals finally closed ($250M+).

- Why banks are pulling AI off the cloud onto private racks 🖥️.

- Unpacking a quiet $575M noncontrolling equity inflow alongside a $1B quantum award.

- Consulting margins compressed 70 bps YoY to fund a "services as software" shift.


While Wall Street debated conservative full-year revenue guidance (held at 4%–5% constant currency), CEO Arvind Krishna explained why major banks and trading desks are balking at public LLM prompt logs—driving a 31% YoY surge in Distributed Infrastructure as enterprises bring open-weight AI models in-house.


Company: International Business Machines Corporation (IBM) | Q3 FY2026

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