IBM Leans on Hyperscaler GPUs While AI Drives Productivity and Revenue Growth

AI Productivity Breakthrough and Financial Performance

IBM has revealed dramatic productivity gains from its internal AI development tools, with sources indicating that “Project Bob” developer assistance tools have improved coder productivity by 45 percent. According to the company’s Q3 2025 earnings report, this AI-driven efficiency contributed to revenue of $16.33 billion and net income of $1.75 billion, representing nine percent year-over-year growth. This performance marks a significant turnaround from the $330 million loss reported for the same quarter in 2024.

AI Productivity Breakthrough and Financial Performance
Infrastructure and Mainframe Revenue Surge
Strategic Cloud Partnerships Over Capital Investment
Hybrid and Private Cloud Deployment Strategy
Software and Consulting Growth Drivers
Market Reaction and Future Outlook

Infrastructure and Mainframe Revenue Surge

IBM’s infrastructure business showed particularly strong performance, with reports indicating 15 percent year-over-year growth. The company’s mainframe revenue reportedly jumped 59 percent year-over-year, a result analysts attribute to the recent launch of new Z17 systems. Storage products also contributed significantly to this growth, with company executives noting that storage represents a key component of AI infrastructure deployments.

Strategic Cloud Partnerships Over Capital Investment

In a revealing disclosure, IBM CEO Arvind Krishna indicated that the company prefers renting GPU capacity from hyperscale cloud providers rather than competing directly in infrastructure provision. According to his prepared remarks, “We are one of CoreWeave’s large clients. We also tend to use a lot of infrastructure at AWS, at Azure as well as at GCP.” This strategy reportedly allows IBM to focus on consulting and software deployment while avoiding the massive capital expenditure required for competitive AI-grade cloud infrastructure.

Hybrid and Private Cloud Deployment Strategy

The report suggests IBM is pursuing opportunities across multiple deployment models, including private cloud instances and on-premises implementations. Company executives cited “one of our very large health insurance clients” that prefers not to use public cloud but accepts private instances within cloud environments. Additionally, IBM is reportedly deploying its Grok AI systems in clients’ own data centers, creating revenue opportunities in both consulting and software segments.

Software and Consulting Growth Drivers

IBM’s software and consulting businesses are showing strong AI-driven momentum, according to the financial disclosures. Red Hat reportedly grew bookings by approximately 20 percent with revenue improvement of 12 percent. From a software perspective, year-to-date growth reached 8.5 percent overall, with generative AI business contributing about two percentage points of that growth. The consulting business returned to growth this quarter and is already working on 200 projects involving what IBM calls “Digital Workers” – the company‘s term for agentic AI systems.

Market Reaction and Future Outlook

Despite the positive performance indicators, investors reportedly reacted negatively to the earnings release, with IBM shares declining from over $288 to $269 in after-hours trading. The company predicted constant currency revenue growth of more than five percent for full fiscal year 2025, with software growth expected to settle in the “mid-teens or close to mid-teens” range. This mixed market response suggests analysts may be evaluating IBM’s strategic positioning differently than the company’s own growth projections.

References & Further Reading

This article draws from multiple authoritative sources. For more information, please consult:

This article aggregates information from publicly available sources. All trademarks and copyrights belong to their respective owners.

Note: Featured image is for illustrative purposes only and does not represent any specific product, service, or entity mentioned in this article.

Microsoft has announced twelve substantial updates to its Copilot AI platform, featuring new animated companion Mico and real-time collaboration tools. The enhancements position Copilot as contextual AI infrastructure across Windows, Edge, and Microsoft 365 ecosystems, according to company executives.

Microsoft’s AI Evolution: From Productivity Tool to Collaborative Platform

Microsoft has introduced a comprehensive Fall 2025 update for its Copilot AI assistant, featuring twelve significant enhancements that deepen integration across Windows, Edge, and Microsoft 365 applications. According to reports from the company’s live announcement event, the updates represent a strategic shift from AI hype toward practical utility, with new capabilities designed to serve both individual users and enterprise teams.