IBM (NYSE:IBM) Q3 Earnings: Leading The IT Services & Consulting Pack

The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how IBM (NYSE:IBM) and the rest of the it services & consulting stocks fared in Q3.

IT Services & Consulting companies stand to benefit from increasing enterprise demand for digital transformation, AI-driven automation, and cybersecurity resilience. Many enterprises can't attack these topics alone and need IT services and consulting on everything from technical advice to implementation. Challenges in meeting these needs will include finding talent in specialized and evolving IT fields. While AI and automation can enhance productivity, they also threaten to commoditize certain consulting functions. Another ongoing challenge will be pricing pressures from offshore IT service providers, which have lower labor costs and increasingly equal access to advanced technology like AI.

The 8 it services & consulting stocks we track reported a mixed Q3. As a group, revenues along with next quarter’s revenue guidance were in line with analysts’ consensus estimates.

In light of this news, share prices of the companies have held steady as they are up 2.4% on average since the latest earnings results.

Best Q3: IBM (NYSE:IBM)

With a corporate history spanning over a century and once known for its iconic mainframe computers, IBM (NYSE:IBM) provides hybrid cloud computing platforms, AI solutions, consulting services, and enterprise infrastructure to help businesses modernize their operations.

IBM reported revenues of $16.33 billion, up 9.1% year on year. This print exceeded analysts’ expectations by 1.4%. Overall, it was a very strong quarter for the company with an impressive beat of analysts’ operating income estimates and a beat of analysts’ EPS estimates.

"This quarter we accelerated performance across all of our segments, and again exceeded expectations for revenue, profit and free cash flow. Clients globally continue to leverage our technology and domain expertise to drive productivity in their operations and deliver real business value with AI. Our AI book of business now stands at more than $9.5 billion," said Arvind Krishna, IBM chairman, president and chief executive officer.

IBM pulled off the biggest analyst estimates beat of the whole group. Unsurprisingly, the stock is up 9% since reporting and currently trades at $313.95.

Is now the time to buy IBM? Access our full analysis of the earnings results here, it’s free for active Edge members.

EPAM (NYSE:EPAM)

Founded in 1993 during the early days of offshore software development, EPAM Systems (NYSE:EPAM) provides digital engineering, cloud, and AI transformation services to help global enterprises and startups modernize their technology systems and create digital products.

EPAM reported revenues of $1.39 billion, up 19.4% year on year, outperforming analysts’ expectations by 1.4%. The business had a strong quarter with an impressive beat of analysts’ EPS guidance for next quarter estimates and a solid beat of analysts’ full-year EPS guidance estimates.

EPAM pulled off the fastest revenue growth among its peers. The market seems happy with the results as the stock is up 12% since reporting. It currently trades at $180.16.

Is now the time to buy EPAM? Access our full analysis of the earnings results here, it’s free for active Edge members.

Grid Dynamics (NASDAQ:GDYN)

With engineering centers across the Americas, Europe, and India serving Fortune 1000 companies, Grid Dynamics (NASDAQ:GDYN) provides technology consulting, engineering, and analytics services to help large enterprises modernize their technology systems and business processes.

Grid Dynamics reported revenues of $104.2 million, up 19.1% year on year, in line with analysts’ expectations. It was a softer quarter as it posted revenue guidance for next quarter missing analysts’ expectations significantly and EPS in line with analysts’ estimates.

Interestingly, the stock is up 12.2% since the results and currently trades at $8.51.

Read our full analysis of Grid Dynamics’s results here.

DXC (NYSE:DXC)

Born from the 2017 merger of Computer Sciences Corporation and HP Enterprise's services business, DXC Technology (NYSE:DXC) is a global IT services company that helps businesses transform their technology infrastructure, applications, and operations.

DXC reported revenues of $3.16 billion, down 2.5% year on year. This number met analysts’ expectations. Aside from that, it was a mixed quarter as it also produced a beat of analysts’ EPS estimates but a significant miss of analysts’ EPS guidance for next quarter estimates.

DXC delivered the highest full-year guidance raise but had the slowest revenue growth among its peers. The stock is up 4.5% since reporting and currently trades at $13.52.

Read our full, actionable report on DXC here, it’s free for active Edge members.

Gartner (NYSE:IT)

With over 2,500 research experts guiding organizations through complex technology landscapes, Gartner (NYSE:IT) provides research, advisory services, and conferences that help executives make better decisions about technology and other business priorities.

Gartner reported revenues of $1.52 billion, up 2.7% year on year. This print was in line with analysts’ expectations. Overall, it was a strong quarter as it also put up a beat of analysts’ EPS estimates and revenue in line with analysts’ estimates.

The stock is down 6% since reporting and currently trades at $231.25.

Read our full, actionable report on Gartner here, it’s free for active Edge members.

Market Update

Thanks to the Fed’s series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% in November), and a notable surge followed Donald Trump’s presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by potential trade policy changes and corporate tax discussions, which could impact business confidence and growth. The path forward holds both optimism and caution as new policies take shape.

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