IBM shares slide as slowing cloud growth sparks investor concerns
IBM shares fell nearly 7% in premarket trading on Thursday after slowing growth in its core cloud software business rattled investor confidence in the tech giant’s ability to tap into booming demand for cloud and AI services.
The company’s cloud unit, part of its broader software segment, reported weaker-than-expected expansion — raising fresh questions about IBM’s position in the fast-growing cloud market, News.Az reports, citing Reuters.
Growth in its hybrid cloud division, Red Hat, eased to 14%, down from 16% in the previous quarter.
Investors had previously bet big on IBM’s AI-driven cloud transformation, helping push its stock up nearly 30% so far this year. Still, the latest slowdown suggests Big Blue may face stiffer competition from cloud rivals even as it ramps up its AI offerings.
On the brighter side, IBM’s infrastructure business — which includes its mainframe division — delivered a 17% increase in quarterly revenue to $3.56 billion, helping the company beat third-quarter sales and profit estimates.
Looking ahead, the New York-based tech firm raised its full-year revenue growth forecast to over 5% in constant currency and reaffirmed its free cash flow target of around $14 billion.
Some analysts believe IBM could pursue mergers and acquisitions to reinvigorate its growth trajectory and expand its cloud capabilities further.
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