International Business Machines (NYSE: IBM) stock is losing ground Thursday on the heels of the company's recent third-quarter report. Big Blue's share price was down 6.6% as of 1:45 p.m. ET.

After the market closed yesterday, IBM published third-quarter earnings results. While the company's profit for the period came in ahead of Wall Street's target, sales arrived below expectations.

IBM serves up mixed Q3 results

IBM reported non-GAAP (adjusted) earnings per share of $2.30 on revenue of $14.97 billion in Q3. Meanwhile, the average analyst estimate had called for an adjusted profit of $2.23 per share on sales of roughly $15.1 billion. Revenue was up roughly 1.5% year over in the period, with 10% growth for the software segment revenue being partially offset by a 7% decline for infrastructure revenue. Sales for the consulting segment were essentially flat in the period.

What comes next for IBM stock?

IBM guided for fourth-quarter revenue to deliver sales growth that was in line with what it posted in Q3. The company also reiterated its expectation for more than $12 billion in free cash flow for the full year.

Even with today's pullback, IBM stock is up roughly 33% across 2024's trading and roughly 59% over the last year. The big gains appear to have primarily been driven by excitement surrounding the company's opportunities in artificial intelligence (AI).

IBM has a large and entrenched customer base, and it has been finding some success with its AI consulting business. On the other hand, overall sales and earnings performance has been coming in at levels that lag far behind the big ramp-up for the company's valuation.

Right now, there's not much evidence that artificial intelligence is really powering a meaningful transformation at the business. That's not to say that Big Blue won't be able to score more transformative wins down the line, but I would want to see more signs that the company's overall momentum is shifting in positive directions before getting behind the business as a credible player in AI.

Should you invest $1,000 in International Business Machines right now?

Before you buy stock in International Business Machines, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and International Business Machines wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $855,238!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.