• CNBC's Jim Cramer on Thursday advised investors to tread carefully if they're debating whether to buy shares of IBM after the company reported its third-quarter earnings.
• "Even after IBM's nearly 5% rally today, the stock's still down substantially versus where it was trading just a few months ago. I'm optimistic," he said.

CNBC's Jim Cramer on Thursday advised investors to tread carefully if they're debating whether to buy shares of IBM after the company reported its third-quarter earnings.

"Even after IBM's nearly 5% rally today, the stock's still down substantially versus where it was trading just a few months ago. I'm optimistic … but keep in mind this remains a 'trust but verify' situation going forward," he said.

IBM beat revenue and earnings estimates in its third-quarter results reported on Wednesday and raised its revenue outlook. The enterprise software and consulting company said that revenue increased 6.5% year-over-year.

While the strong U.S. dollar is a headwind for the company, which expects that it will have 7% less full-year revenue than it otherwise would have made, IBM still reiterated its guidance from earlier this year of around $10 billion in free cash flow.

"Put it all together, and while IBM still has plenty of room for improvement, this quarter was a big step forward for them, and it was a major win for the bulls," Cramer said.

He added that the company's spin-off of its managed infrastructure services business into Kyndryl in November 2021 seems to be paying off.

"Remember, IBM went through that whole Kyndryl spin-off in order to become a growth company again, and that's now what they are — they've got growth in spades,"  he said.

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