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IBM’s Cloud Growth Slows Despite Strong AI Mainframe Demand and Solid Q3 Results

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IBM reported third-quarter revenue and profit that beat market expectations, but investor optimism dimmed as growth in its key cloud software division slowed. The company’s shares fell 5% in after-hours trading, despite strong results driven by soaring demand for its new AI-powered mainframe systems.

Revenue in the hybrid cloud unit, which includes Red Hat, rose 14% compared to 16% in the previous quarter — a slowdown that raised investor concern about IBM’s ability to fully capitalize on the global cloud boom. Total quarterly revenue reached $16.33 billion, surpassing analyst estimates of $16.09 billion, according to LSEG data.

CEO Arvind Krishna said IBM expects Red Hat’s growth to return to mid-teen levels by 2026. Analysts noted that the deceleration in software sales may disappoint investors, given the segment’s high margins. However, IBM’s infrastructure division, housing its mainframe business, was a standout performer with revenue up 17% to $3.56 billion.

The new mainframe, optimized for AI workloads, is being widely adopted in the financial sector due to its data security and encryption strengths. IBM’s total AI-related business has grown to $9.5 billion, up $2 billion from the previous quarter. The company raised its full-year outlook, now expecting revenue growth above 5% at constant currency.

OpenAI’s Valuation Soars to $500 Billion After Major Share Sale Involving SoftBank

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OpenAI, the creator of ChatGPT, has achieved a staggering $500 billion valuation after employees and former staff sold $6.6 billion worth of shares to major global investors, according to a source cited by Reuters. This marks a sharp rise from its previous valuation of $300 billion, signaling the company’s explosive growth in both user base and revenue.

The deal involved sales to a powerful consortium of investors, including Thrive Capital, SoftBank, Dragoneer Investment Group, Abu Dhabi’s MGX, and T. Rowe Price. The company reportedly authorized the sale of more than $10 billion in stock on the secondary market, giving early employees and stakeholders the chance to cash out part of their holdings while maintaining OpenAI’s momentum in private financing rounds.

SoftBank, already a participant in OpenAI’s $40 billion primary funding round, has further strengthened its position with this deal. None of the involved firms immediately commented on the transaction.

Financially, OpenAI continues to outperform expectations. The company brought in around $4.3 billion in revenue during the first half of 2025, which is roughly 16% higher than its total revenue for the entirety of 2024, according to The Information.

The timing of this sale coincides with intensifying competition among global tech giants for AI talent and infrastructure dominance. Meta, for instance, is heavily investing in AI companies like Scale AI, and recently hired its 28-year-old CEO, Alexandr Wang, to spearhead its new superintelligence division—a move highlighting the escalating arms race in artificial intelligence innovation and expertise.

As OpenAI’s valuation hits half a trillion dollars, the company stands at the center of this rapidly transforming landscape—its technology, partnerships, and pace of growth redefining the frontier of modern computing.

Trump’s Call for Intel CEO Lip-Bu Tan’s Resignation Sparks Mixed Reactions

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U.S. President Donald Trump has called for the immediate resignation of Intel CEO Lip-Bu Tan, citing concerns over his extensive investments in Chinese technology companies — including at least eight with reported links to China’s People’s Liberation Army. The demand comes just months after Tan took over leadership of the struggling semiconductor giant.

According to an April Reuters investigation, Tan’s decades-long career includes hundreds of investments in Chinese firms, both personally and through venture funds he founded. On Wednesday, Reuters also reported that Senator Tom Cotton had raised questions about Tan’s ties to China and a recent criminal case involving his former company, Cadence Design Systems.

Reactions from analysts and investors have been sharply divided. Some view Tan’s knowledge of China’s semiconductor industry as an invaluable asset for Intel and the U.S., while others see Trump’s intervention as a sign of escalating political pressure and market uncertainty.

Key reactions:

  • Anshel Sag, Moor Insights & Strategy – Criticized Trump’s call, arguing that Tan’s deep understanding of China’s semiconductor capabilities could benefit Intel and the U.S., making him more valuable rather than less.

  • David Wagner, Aptus Capital Advisors – Said Trump’s move reflects his broader push to bring business back to the U.S., noting the momentum from the recent Apple deal.

  • Ryuta Makino, Gabelli Funds – Suggested Trump’s motives may be tied to Intel’s manufacturing strategy and possible deals with TSMC, calling it “very much a political move.”

  • Blake Anderson, Carson Group – Warned that such political disputes highlight Intel’s reliance on external factors for its manufacturing turnaround, increasing long-term uncertainty.

  • Shiraz Ahmed, Sartorial Wealth – Noted that Trump has a history of publicly criticizing corporate leaders and predicted it will not be the last such intervention.

  • Phil Blancato, Ladenburg Thalmann – Called it a troubling precedent for presidents to dictate corporate leadership, but acknowledged Trump’s opinion carries weight. He added that Intel’s problems extend beyond its CEO and require “real, radical change.”

The Intel board has yet to respond publicly, but the controversy underscores the growing intersection of geopolitics and corporate governance in the U.S. technology sector.