IBM (NYSE: IBM) stock price extends its calmness after experiencing robust growth in cloud revenues. Although its Q3 revenue and earnings fell short of estimates, growth from cloud revenue supported sentiments.
IBM shares remain strong despite lower than expected financial numbers. IBM stock price currently trades around $140, down slightly from 52-weeks high of $150 a share. Analysts have a mixed opinion about IBM shares upside potential.
Cloud Revenue Growth Supports IBM Stock Price
The company has been aggressively focusing on cloud markets to capture the share in the emerging market. The company has recently completed a $34 billion acquisition of Red Hat to enhance its footprints in cloud markets.
Red Hat is an open-source enterprise software maker. Red Hat is included as a unit of IBM’s hybrid cloud division.
The company generated year over year revenue growth of 19% from Red Hat in Q3. The revenue growth from Red Hat helped in enhancing its overall cloud revenue.
IBM’s total cloud revenue stood around $5 billion in the third quarter, up 5% from last quarter. The company has generated a cloud revenue of $20 billion in the past twelve months.
Ginni Rometty, IBM chairman, president, and chief executive officer, “Our results demonstrate that clients see IBM and Red Hat as a powerful combination and they trust us to provide them with the open hybrid cloud technology, innovation, and industry expertise to help them shift their mission-critical workloads to the cloud.”
IBM Sticks to Earnings Guidance
Despite lower than expected growth in Q3 earnings, the company expects to hit its full-year earnings target. It expects GAAP earnings per share to stand around $10.58 for full-year; the operating non-GAAP earnings per share target is $12.80.
On the other hand, the company believes they are in a position to reduce debt along with returning cash to investors. It maintains full-year free cash flow guidance at $12 billion. It has reduced $6.7 billion of debt in the third quarter.