Is IBM Stock A Buy After Missing On Transaction Processing?

International Business Machines (IBM) has given back 12.9% over the past three months and sits at $239.94, about 73% of its 52-week high. Management sees no evidence of clients moving off the mainframe. What has changed is that a key slice of IBM’s transactional software revenue rides on a purchase those clients have learned they can postpone.

IBM Did Not Close The Deals It Was Counting On In June

Revenue grew 1% in the June quarter at constant currency. Transaction processing revenue fell 9% on that basis, while data grew 18% and automation grew 3%. Tens of large deals failed to close on the timelines the company expected, and they accounted for most of the shortfall.

Revenue over the past twelve months still reads $69.1 billion, up 7.9%, because that window carries three quarters that grew above 9%. The June quarter itself grew 1.1% as reported.

The vulnerability lies in where the revenue shortfall occurred. About 80% of IBM’s software revenue is recurring, and it grew nicely. The other 20% is transactional, sold through enterprise license agreements that clients buy alongside mainframe hardware and book as capital spending. Those agreements typically carry a heavy concentration of transaction processing software, though they can also include data and automation products. The CFO puts the multiplier at more than $3 of software for every dollar of hardware landed.

But IBM Was Not The Most Urgent Bill To Pay

In the final weeks of June, management says, clients redirected spending towards servers, storage and memory purchases to secure supply-constrained infrastructure ahead of expected price increases. By the CEO’s account, some of those alternate purchases were rising 30% in dollar value quarter to quarter, so budget went where prices were climbing fastest.

IBM held its own price through the first weeks of July, management says, and is less aggressive on increases than the alternate infrastructure providers. That is defensible. It also hands the timing of IBM’s software revenue to an infrastructure price surge the company has chosen not to match.

So How Long Can IBM Wait For That Money?

Longer than one quarter. About a third of the slipped deals closed within three weeks of the June quarter ending, which is management’s case for deferral rather than destruction. With transactional software depressed, analysts increasingly view Transaction Processing as a potential 2027 rebound rather than a 2026 driver.

By the CFO’s description, clients capable of purchasing via monthly license charges (MLC) can run on an operating-expense model without a big purchase for three years, though he adds that the upgrade cycle eventually catches them and moves in IBM’s favor. Three years is long enough for a risk to arrive without ever looking like an event.

Some of this is already in the price. IBM lost 3.9% over the past twelve months while the S&P 500 returned 18.5%, and the 2026 revenue guide is now 4% to 5% at constant currency, about a point lower at the low end.

Implied volatility sits in the 63rd percentile of its own one-year range, so the market has not settled it. Watch transaction processing revenue. It tells you whether the deals came back or the clients learned to live without them.

So Do You Sit Through The Wait With IBM?

Only if you can say how long you are willing to wait, and what you would rather own meanwhile. The risk here is a purchase that does not happen on schedule.

Weighing that across everything you hold is what a portfolio is for. Since its inception, our rule-based High Quality Portfolio has outperformed its benchmark, a blend of three major indices.

And if the fall is what tempts you, our Dip Buyer’s Playbook shows which declines the numbers support.