International Business Machines (IBM)
Market Price (7/25/2026): $212.98 | Market Cap: $200.5 BilInvestor Relations Sector: Information Technology | Industry: IT Consulting & Other Services
International Business Machines (IBM)
Market Price (7/25/2026): $212.98Market Cap: $200.5 BilSector: Information TechnologyIndustry: IT Consulting & Other Services
Investment Highlights Why It Matters Detailed financial logic regarding cash flow yields vs trend-riding momentum.
Attractive yieldTotal YieldTotal Yield = Earnings Yield + Dividend Yield, Earnings Yield = Net Income / Market Cap Dividend Yield = Total Dividends / Market Cap is 8.4%, Dividend Yield is 3.1%, ERPEquity Risk Premium (ERP) = Total Yield - Risk Free Rate, Reflects the premium above risk free assets offered by the investment. is 4.1%, FCF Yield is 6.5% Attractive cash flow generationCFO/Rev LTMCash Flow from Operations / Revenue (Sales), Last Twelve Months (LTM) is 22%, FCF/Rev LTMFree Cash Flow / Revenue (Sales), Last Twelve Months (LTM) is 19%, CFO LTM is 15 Bil, FCF LTM is 13 Bil Stock buyback supportStock Buyback 3Y Total is 2.3 Bil Low stock price volatilityVol 12M is 48% Megatrend and thematic driversMegatrends include Artificial Intelligence, Cloud Computing, Cybersecurity, and Crypto & Blockchain. Show more. | Weak multi-year price returns2Y Excs Rtn is -11% | Key risksIBM key risks include [1] intense competition from major hyperscalers in the hybrid cloud market, Show more. |
| Attractive yieldTotal YieldTotal Yield = Earnings Yield + Dividend Yield, Earnings Yield = Net Income / Market Cap Dividend Yield = Total Dividends / Market Cap is 8.4%, Dividend Yield is 3.1%, ERPEquity Risk Premium (ERP) = Total Yield - Risk Free Rate, Reflects the premium above risk free assets offered by the investment. is 4.1%, FCF Yield is 6.5% |
| Attractive cash flow generationCFO/Rev LTMCash Flow from Operations / Revenue (Sales), Last Twelve Months (LTM) is 22%, FCF/Rev LTMFree Cash Flow / Revenue (Sales), Last Twelve Months (LTM) is 19%, CFO LTM is 15 Bil, FCF LTM is 13 Bil |
| Stock buyback supportStock Buyback 3Y Total is 2.3 Bil |
| Low stock price volatilityVol 12M is 48% |
| Megatrend and thematic driversMegatrends include Artificial Intelligence, Cloud Computing, Cybersecurity, and Crypto & Blockchain. Show more. |
| Weak multi-year price returns2Y Excs Rtn is -11% |
| Key risksIBM key risks include [1] intense competition from major hyperscalers in the hybrid cloud market, Show more. |
Qualitative Assessment
AI Analysis | Feedback
International Business Machines (IBM) stock has lost about 10% since 3/31/2026 because of the following key factors:
1. Q2 2026 Revenue Miss and Reduced Full-Year Guidance.
IBM reported second-quarter fiscal 2026 revenue of $17.16 billion (or $17.2 billion), falling short of analyst estimates ranging from $17.26 billion to $17.86 billion. This revenue miss, notably after a preliminary warning on July 14, 2026, triggered a single-day stock decline of over 25%, marking the largest in the company's history. Consequently, IBM lowered its full-year fiscal 2026 constant currency revenue growth outlook to a range of 4-5% from its previous expectation of "more than 5%."
2. Weakness in Infrastructure Segment Driven by IBM Z Mainframe Decline.
The Infrastructure segment experienced a 7% revenue decline in fiscal Q2 2026. A significant contributor to this downturn was a 42% plunge in revenues from IBM Z mainframe sales, which was more substantial than anticipated. This sharp decline in a key hardware area directly impacted overall company performance.
Show more
International Business Machines (IBM) stock has lost about 10% since 3/31/2026 because of the following key factors:
1. Q2 2026 Revenue Miss and Reduced Full-Year Guidance.
IBM reported second-quarter fiscal 2026 revenue of $17.16 billion (or $17.2 billion), falling short of analyst estimates ranging from $17.26 billion to $17.86 billion. This revenue miss, notably after a preliminary warning on July 14, 2026, triggered a single-day stock decline of over 25%, marking the largest in the company's history. Consequently, IBM lowered its full-year fiscal 2026 constant currency revenue growth outlook to a range of 4-5% from its previous expectation of "more than 5%."
2. Weakness in Infrastructure Segment Driven by IBM Z Mainframe Decline.
The Infrastructure segment experienced a 7% revenue decline in fiscal Q2 2026. A significant contributor to this downturn was a 42% plunge in revenues from IBM Z mainframe sales, which was more substantial than anticipated. This sharp decline in a key hardware area directly impacted overall company performance.
3. Client Spending Delays and Reprioritization of Capital Expenditure.
Management attributed the revenue shortfall largely to a late-quarter shift in client spending patterns, specifically in June 2026. Large clients redirected capital expenditure away from software and certain services towards securing supply-constrained servers, storage, and memory in anticipation of price increases. Additionally, ongoing cybersecurity concerns also led to delays in closing major deals.
Show less
Stock Movement Drivers
Fundamental Drivers
The -11.0% change in IBM stock from 3/31/2026 to 7/24/2026 was primarily driven by a -11.6% change in the company's P/E Multiple.| (LTM values as of) | 3312026 | 7242026 | Change |
|---|---|---|---|
| Stock Price ($) | 240.62 | 214.19 | -11.0% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 67,536 | 69,097 | 2.3% |
| Net Income Margin (%) | 15.7% | 15.5% | -1.0% |
| P/E Multiple | 21.3 | 18.8 | -11.6% |
| Shares Outstanding (Mil) | 936 | 941 | -0.5% |
| Cumulative Contribution | -11.0% |
Market Drivers
3/31/2026 to 7/24/2026| Return | Correlation | |
|---|---|---|
| IBM | -11.0% | |
| Market (SPY) | 13.6% | 5.3% |
| Sector (XLK) | 32.3% | 3.6% |
Fundamental Drivers
The -26.7% change in IBM stock from 12/31/2025 to 7/24/2026 was primarily driven by a -45.6% change in the company's P/E Multiple.| (LTM values as of) | 12312025 | 7242026 | Change |
|---|---|---|---|
| Stock Price ($) | 292.38 | 214.19 | -26.7% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 65,402 | 69,097 | 5.6% |
| Net Income Margin (%) | 12.1% | 15.5% | 28.4% |
| P/E Multiple | 34.5 | 18.8 | -45.6% |
| Shares Outstanding (Mil) | 934 | 941 | -0.8% |
| Cumulative Contribution | -26.7% |
Market Drivers
12/31/2025 to 7/24/2026| Return | Correlation | |
|---|---|---|
| IBM | -26.7% | |
| Market (SPY) | 8.7% | 19.1% |
| Sector (XLK) | 22.3% | 14.3% |
Fundamental Drivers
The -25.5% change in IBM stock from 6/30/2025 to 7/24/2026 was primarily driven by a -61.4% change in the company's P/E Multiple.| (LTM values as of) | 6302025 | 7242026 | Change |
|---|---|---|---|
| Stock Price ($) | 287.43 | 214.19 | -25.5% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 62,830 | 69,097 | 10.0% |
| Net Income Margin (%) | 8.7% | 15.5% | 78.2% |
| P/E Multiple | 48.7 | 18.8 | -61.4% |
| Shares Outstanding (Mil) | 928 | 941 | -1.4% |
| Cumulative Contribution | -25.5% |
Market Drivers
6/30/2025 to 7/24/2026| Return | Correlation | |
|---|---|---|
| IBM | -25.5% | |
| Market (SPY) | 20.6% | 22.3% |
| Sector (XLK) | 39.5% | 17.3% |
Fundamental Drivers
The 76.3% change in IBM stock from 6/30/2023 to 7/24/2026 was primarily driven by a 412.7% change in the company's Net Income Margin (%).| (LTM values as of) | 6302023 | 7242026 | Change |
|---|---|---|---|
| Stock Price ($) | 121.47 | 214.19 | 76.3% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 60,584 | 69,097 | 14.1% |
| Net Income Margin (%) | 3.0% | 15.5% | 412.7% |
| P/E Multiple | 60.1 | 18.8 | -68.7% |
| Shares Outstanding (Mil) | 908 | 941 | -3.6% |
| Cumulative Contribution | 76.3% |
Market Drivers
6/30/2023 to 7/24/2026| Return | Correlation | |
|---|---|---|
| IBM | 76.3% | |
| Market (SPY) | 72.6% | 32.2% |
| Sector (XLK) | 106.1% | 26.8% |
Price Returns Compared
| 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | Total [1] | |
|---|---|---|---|---|---|---|---|
| Returns | |||||||
| IBM Return | 16% | 11% | 22% | 39% | 38% | -29% | 113% |
| Peers Return | 44% | -31% | 52% | 31% | 17% | -21% | 83% |
| S&P 500 Return | 27% | -19% | 24% | 23% | 16% | 8% | 97% |
Monthly Win Rates [3] | |||||||
| IBM Win Rate | 58% | 50% | 67% | 75% | 50% | 43% | |
| Peers Win Rate | 67% | 28% | 68% | 63% | 48% | 37% | |
| S&P 500 Win Rate | 75% | 42% | 67% | 75% | 67% | 43% | |
Max Drawdowns [4] | |||||||
| IBM Max Drawdown | -18% | -17% | -15% | -17% | -20% | -37% | |
| Peers Max Drawdown | -11% | -40% | -17% | -20% | -34% | -35% | |
| S&P 500 Max Drawdown | -5% | -25% | -10% | -8% | -19% | -9% | |
[1] Cumulative total returns since the beginning of 2021
[2] Peers: MSFT, AMZN, ORCL, ACN, GOOGL. See IBM Returns vs. Peers.
[3] Win Rate = % of calendar months in which monthly returns were positive
[4] Max drawdown represents maximum peak-to-trough decline within a year
[5] 2026 data is for the year up to 7/24/2026 (YTD)
How Low Can It Go
| Event | IBM | S&P 500 |
|---|---|---|
| 2025 US Tariff Shock | ||
| % Loss | -16.4% | -18.8% |
| % Gain to Breakeven | 19.6% | 23.1% |
| Time to Breakeven | 37 days | 79 days |
| 2023 SVB Regional Banking Crisis | ||
| % Loss | -10.8% | -6.7% |
| % Gain to Breakeven | 12.1% | 7.1% |
| Time to Breakeven | 32 days | 31 days |
| 2022 Inflation Shock & Fed Tightening | ||
| % Loss | -10.4% | -24.5% |
| % Gain to Breakeven | 11.6% | 32.4% |
| Time to Breakeven | 12 days | 427 days |
| 2020 COVID-19 Crash | ||
| % Loss | -37.2% | -33.7% |
| % Gain to Breakeven | 59.2% | 50.9% |
| Time to Breakeven | 394 days | 140 days |
| Q4 2018 Fed Policy Error / Growth Scare | ||
| % Loss | -28.9% | -19.2% |
| % Gain to Breakeven | 40.6% | 23.8% |
| Time to Breakeven | 206 days | 105 days |
| 2015-2016 China Devaluation / Global Growth Scare | ||
| % Loss | -23.1% | -12.2% |
| % Gain to Breakeven | 30.1% | 13.9% |
| Time to Breakeven | 105 days | 62 days |
In The Past
International Business Machines's stock fell -16.4% during the 2025 US Tariff Shock. Such a loss loss requires a 19.6% gain to breakeven.
Preserve Wealth
Limiting losses and compounding gains is essential to preserving wealth.
Asset Allocation
Actively managed asset allocation strategies protect wealth. Learn more.
| Event | IBM | S&P 500 |
|---|---|---|
| 2020 COVID-19 Crash | ||
| % Loss | -37.2% | -33.7% |
| % Gain to Breakeven | 59.2% | 50.9% |
| Time to Breakeven | 394 days | 140 days |
| Q4 2018 Fed Policy Error / Growth Scare | ||
| % Loss | -28.9% | -19.2% |
| % Gain to Breakeven | 40.6% | 23.8% |
| Time to Breakeven | 206 days | 105 days |
| 2015-2016 China Devaluation / Global Growth Scare | ||
| % Loss | -23.1% | -12.2% |
| % Gain to Breakeven | 30.1% | 13.9% |
| Time to Breakeven | 105 days | 62 days |
| 2014-2016 Oil Price Collapse | ||
| % Loss | -35.6% | -6.8% |
| % Gain to Breakeven | 55.4% | 7.3% |
| Time to Breakeven | 349 days | 15 days |
| 2008-2009 Global Financial Crisis | ||
| % Loss | -34.6% | -53.4% |
| % Gain to Breakeven | 52.8% | 114.4% |
| Time to Breakeven | 203 days | 1085 days |
In The Past
International Business Machines's stock fell -16.4% during the 2025 US Tariff Shock. Such a loss loss requires a 19.6% gain to breakeven.
Preserve Wealth
Limiting losses and compounding gains is essential to preserving wealth.
Asset Allocation
Actively managed asset allocation strategies protect wealth. Learn more.
About International Business Machines (IBM)
International Business Machines Corporation, known as IBM, is a global technology and consulting company that provides integrated solutions and services worldwide. Founded in 1911, IBM helps businesses across various industries manage complex IT environments, transform their operations, and innovate using advanced technologies. The company operates through four main segments: Software, Consulting, Infrastructure, and Financing.
In its Software segment, IBM offers a robust portfolio including hybrid cloud platforms like Red Hat, business automation tools, artificial intelligence and data analytics solutions, and security software. This segment also provides critical transaction processing software that supports mission-critical workloads for industries such as banking, airlines, and retail. The Consulting segment focuses on business transformation, providing services in strategy, business process design, data and analytics, and system integration, helping clients implement new technologies and optimize their operations.
IBM's Infrastructure segment delivers powerful on-premises and cloud-based server and storage solutions designed for mission-critical and regulated workloads, along with support for hybrid cloud environments. Additionally, its Financing segment provides various lease, loan, and short-term working capital options to support clients acquiring IBM's technology and services. Collectively, IBM serves a broad array of enterprise customers across diverse sectors globally, enabling them to build, manage, and secure their digital foundations and drive business growth.
AI Analysis | Feedback
IBM is like the Microsoft for large enterprise IT, providing critical software, hardware, and consulting services.
A combination of Accenture's IT consulting and Oracle's enterprise software and infrastructure, tailored for the world's biggest businesses.
AI Analysis | Feedback
Here are the major products and services offered by International Business Machines (IBM):
- Hybrid Cloud Platform & Software: Provides enterprise open-source solutions, including Red Hat, for hybrid cloud environments.
- Business Automation & AI Software: Offers software for business process automation, AIOps, IT management, data analytics, and artificial intelligence.
- Security Software & Services: Delivers solutions for threat, data, and identity security.
- Transaction Processing Software: Supports mission-critical, on-premise workloads for industries such as banking, airlines, and retail.
- Business & Technology Consulting: Provides strategic advice, business process design, data analytics, system integration, and technology consulting services.
- Application & Cloud Platform Services: Offers services for developing, deploying, and managing applications and cloud platforms.
- Server & Storage Hardware: Supplies on-premises and cloud-based server and storage solutions for mission-critical and regulated workloads.
- Hybrid Cloud Infrastructure Support: Provides support services and solutions for clients' hybrid cloud infrastructure.
- Financing Services: Offers lease, installment payment, loan financing, and short-term working capital financing for clients.
AI Analysis | Feedback
- Banking
- Airlines
- Retail
AI Analysis | Feedback
International Business Machines (symbol: IBM) has the following major suppliers:
- GlobalFoundries (symbol: GFS)
- Micron Technology (symbol: MU)
- Western Digital (symbol: WDC)
AI Analysis | Feedback
Arvind Krishna, Chairman and CEO
Arvind Krishna joined IBM in 1990 at its Thomas J. Watson Research Center. He held critical leadership roles including Senior Vice President of Cloud and Cognitive Software and Director of IBM Research. He was a principal architect of the acquisition of Red Hat, the largest acquisition in the company's history. Krishna led the building and expansion of new markets for IBM in artificial intelligence, cloud, quantum computing, and blockchain technology. He became CEO in April 2020 and Chairman in January 2021. He holds a PhD in electrical engineering from the University of Illinois at Urbana-Champaign and a B. Tech from the Indian Institute of Technology, Kanpur.
James J. Kavanaugh, Senior Vice President and Chief Financial Officer
James J. Kavanaugh joined IBM in 1996. Prior to joining IBM, he served as Chief Financial Officer, Americas Global Services, at AT&T Corporation. He was appointed CFO in January 2018 and oversees IBM's worldwide financial operations, including accounting, investor relations, corporate strategy, corporate development, and treasury. Kavanaugh has been instrumental in aligning IBM's financial strategy with its long-term transformation goals, including managing divestitures, such as Kyndryl, and funding major acquisitions. He holds an MBA from The Ohio State University and a BS from the University of Dayton. He currently serves on the T-Mobile US Board of Directors.
Rob Thomas, Senior Vice President, Software and Chief Commercial Officer
Rob Thomas oversees IBM's software business, including global product, development, business, and revenue, and is responsible for all go-to-market activities across IBM's portfolio. He directed major acquisitions totaling over $12 billion, further strengthening IBM's capabilities in software solutions. His 20-year IBM tenure includes leadership in consulting, microelectronics, and software, and he is the author of several books on big data and AI.
Mohamad Ali, Senior Vice President, IBM Consulting
Mohamad Ali leads IBM Consulting, directing global business transformation and technology services through industry expertise and strategic partnerships. Before joining IBM, he served as CEO of IDG and Carbonite, and was Chief Strategy Officer at Hewlett Packard.
Nickle LaMoreaux, Senior Vice President & Chief Human Resources Officer
Nickle LaMoreaux oversees IBM's global HR function, including talent acquisition, workforce development, diversity, equity, and inclusion (DEI), compensation, and leadership development. Under her leadership, IBM adopted agile work models and expanded skills-based hiring. She plays a key role in change management as IBM adapts its workforce to new business models in cloud, AI, and consulting.
AI Analysis | Feedback
Key Risks to International Business Machines (IBM)
- Intense Competition and Market Share Erosion in Hybrid Cloud and AI: IBM operates in a fiercely competitive environment, particularly in its hybrid cloud and enterprise software segments, where it contends with hyperscale providers like Microsoft and Amazon Web Services. Its consulting arm also battles global systems integrators, and the AI arena sees competition from both large tech companies and agile startups. IBM's revenue growth can be dwarfed by competitors, making it challenging to compete on the breadth of services and pricing in the public cloud sector.
- Cybersecurity Threats and Cloud Reliability Issues: As a major provider of integrated solutions and services, IBM is exposed to significant and evolving cybersecurity threats, including data breaches, ransomware, and other malicious attacks. The increased use of AI may introduce novel methods of attack, and the company's reliance on third-party suppliers also presents cybersecurity risks. Furthermore, frequent cloud outages and systemic weaknesses in its control plane architecture have been reported, which can erode customer trust and undermine IBM's hybrid cloud strategy and overall reliability.
- Challenges in AI Adoption, Governance, and Skills Shortage: The rapid advancement and adoption of generative AI present both opportunities and risks for IBM. A significant challenge lies in governance gaps, as many organizations, including those using IBM's AI models, lack robust AI governance policies and proper access controls. Additionally, there is a recognized skills shortage, particularly in the IBM i platform, and a broader need for workforce retraining and reskilling for AI, which could hinder IBM's ability to effectively implement and deliver AI solutions. Misalignment between client IT roadmaps and IBM's hybrid-cloud strategy, alongside the pressure to modernize while maintaining legacy systems, further contributes to this risk.
AI Analysis | Feedback
The rapid advancements and widespread adoption of generative artificial intelligence (AI) technologies, such as large language models (LLMs), present a clear emerging threat. While IBM has a long history in AI with its Watson platform and offers "data and artificial intelligence solutions," the current paradigm shift driven by companies like OpenAI, Google, and Meta, with their highly capable and increasingly accessible generative AI models, is redefining the competitive landscape. If IBM's enterprise AI offerings do not effectively integrate and leverage these new, powerful capabilities, or if competitors deliver more compelling and performant generative AI solutions that address business problems more efficiently, IBM's market position in this critical and rapidly evolving technology domain could be significantly challenged.
AI Analysis | Feedback
International Business Machines (IBM) operates across several key segments, each addressing significant global markets:
Software Segment
- Hybrid Cloud Platform and Software Solutions: The global hybrid cloud market size was valued at USD 171.6 billion in 2025 and is projected to reach USD 619.6 billion by 2034, exhibiting a compound annual growth rate (CAGR) of 14.88% during 2026-2034.
- Enterprise Open-Source Solutions (Red Hat): The global open source software market size is expected to grow from USD 48.54 billion in 2025 to USD 95.38 billion by 2030, at a CAGR of 14.0%.
- Business Automation Software: The global business process automation market size was approximately USD 9.78 billion in 2022 and is predicted to grow to around USD 21.15 billion by 2030, with a CAGR of roughly 10.10% between 2023 and 2030.
- AIOps and Management: The global Artificial Intelligence for IT Operations (AIOps) platform market size was estimated at USD 14.60 billion in 2024 and is projected to reach USD 36.07 billion by 2030, growing at a CAGR of 15.2% from 2025 to 2030.
- Data and Artificial Intelligence Solutions: The global Artificial Intelligence (AI) software market size is forecast to reach US$174.1 billion in 2025 and is estimated to be valued at US$467 billion by 2030, growing at a CAGR of 25%.
- Security Software and Services (Cybersecurity): The global cybersecurity market size reached USD 326.2 billion in 2025. Looking forward, the market is expected to reach USD 676.3 billion by 2034, exhibiting a CAGR of 8.40% during 2026-2034.
- Transaction Processing Software: The global Payment Processing Software market size is expected to reach USD 74,362.1 million by the end of 2025 and USD 165,495 million by 2033, growing at a CAGR of 10.517% during 2025 to 2033.
Consulting Segment
- Business Transformation, Technology Consulting, and Application and Cloud Platform Services: The global IT consulting services market size is estimated at USD 69,590 million in 2025 and is expected to rise to USD 106,580 million by 2034, experiencing a CAGR of 6.4%.
Infrastructure Segment
- On-premises and Cloud-based Server Solutions: The global enterprise server market size reached USD 132.0 billion in 2024. Looking forward, the market is expected to reach USD 310.0 billion by 2033, exhibiting a CAGR of 10% during 2025-2033.
- Storage Solutions: The global enterprise data storage market size is projected to surge from USD 13.1 billion in 2025 to USD 19.8 billion by 2034, expanding at a CAGR of 4.7% over the forecast period.
Financing Segment
- Lease, Installment Payment, Loan Financing, and Short-term Working Capital Financing Services: Null
AI Analysis | Feedback
International Business Machines (IBM) anticipates several key drivers for its future revenue growth over the next two to three years:
- Hybrid Cloud and Generative AI Adoption: IBM's strategy is centered on being a software-led hybrid cloud and AI platform company. The company is experiencing significant growth in its generative AI book of business, which stood at over $12.5 billion by Q4 2025, indicating strong enterprise adoption of its AI capabilities.
- Strong Software Segment Performance: The Software segment, particularly driven by Red Hat, automation, and data & AI offerings, is expected to be a primary growth engine. IBM projected 10% software revenue growth for 2026. Red Hat's annual recurring revenue (ARR) continues to expand, and OpenShift is demonstrating strong growth within Red Hat.
- Accelerating Consulting Services: IBM's Consulting segment is forecast to see accelerated growth, fueled by strong demand for hybrid cloud and AI technologies, as well as its Consulting Advantage platform which leverages digital assets for client value.
- IBM Z Mainframe Cycle: The latest generation of IBM's mainframe platform (z17) is a significant contributor to the Infrastructure segment's revenue. Its robust adoption, particularly for mission-critical and AI/hybrid cloud workloads, continues to drive growth.
- Strategic Acquisitions: Mergers and acquisitions, primarily focused on software, remain a core strategy for IBM to enhance its portfolio and accelerate growth. Acquisitions like Confluent are expected to contribute to revenue growth in 2026 and beyond.
AI Analysis | Feedback
Share Repurchases
- IBM suspended its share repurchase program from 2020 through 2023 to focus on debt repayment following the Red Hat acquisition.
- As of early 2026, the company has not resumed stock buybacks under current CEO Arvind Krishna, despite having approximately $2.0 billion remaining in share repurchase authorization.
- IBM has not repurchased $2 billion in stock in any single quarter since December 2019.
Share Issuance
- IBM has experienced mild shareholder dilution, with fully-diluted shares outstanding increasing from 904 million in June 2021 to 924 million as of September 2024.
- Shares outstanding for the quarter ending December 31, 2025, were 0.952 billion, reflecting a 1.63% increase year-over-year.
- On average, since 1999, IBM has issued 18.3 million shares annually for stock-based compensation and stock purchase plans.
Outbound Investments
- IBM has continued strategic acquisitions in the last 3-5 years, averaging 8 acquisitions annually from 2020-2025.
- Key acquisitions include HashiCorp for $6.4 billion in April 2024, aimed at enhancing its hybrid cloud platform and infrastructure automation capabilities.
- In December 2025, IBM acquired Confluent for $11 billion to bolster its smart data platform for enterprise generative AI.
- Other acquisitions since 2021 have focused on strengthening its portfolio in areas such as AI-powered application resource management (Turbonomic, 2021), renewable energy asset performance management (Prescinto, 2024), and generative AI data needs (DataStax, 2025).
Capital Expenditures
- IBM's capital expenditures have shown a general downward trend over the last decade.
- Annual capital expenditures were approximately $2.01 billion in 2021, $1.35 billion in 2022, $1.245 billion in 2023, $1.048 billion in 2024, and $1.091 billion in 2025.
- The company's focus on transitioning to higher-growth, higher-margin businesses like software and AI has contributed to a shrinking capital expenditure profile.
Latest Trefis Analyses
Research & Analysis
Invest in Strategies
Wealth Management
Peer Comparisons
| Peers to compare with: |
Financials
| Median | |
|---|---|
| Name | |
| Mkt Price | 223.15 |
| Mkt Cap | 1,412.1 |
| Rev LTM | 195,687 |
| Op Inc LTM | 53,932 |
| FCF LTM | 12,863 |
| FCF 3Y Avg | 16,820 |
| CFO LTM | 90,254 |
| CFO 3Y Avg | 72,175 |
Growth & Margins
| Median | |
|---|---|
| Name | |
| Rev Chg LTM | 15.8% |
| Rev Chg 3Y Avg | 11.4% |
| Rev Chg Q | 17.5% |
| QoQ Delta Rev Chg LTM | 3.9% |
| Op Inc Chg LTM | 20.4% |
| Op Inc Chg 3Y Avg | 19.2% |
| Op Mgn LTM | 25.7% |
| Op Mgn 3Y Avg | 24.3% |
| QoQ Delta Op Mgn LTM | 0.2% |
| CFO/Rev LTM | 31.6% |
| CFO/Rev 3Y Avg | 29.0% |
| FCF/Rev LTM | 14.6% |
| FCF/Rev 3Y Avg | 15.7% |
Valuation
| Median | |
|---|---|
| Name | |
| Mkt Cap | 1,412.1 |
| P/S | 4.1 |
| P/Op Inc | 17.4 |
| P/EBIT | 15.0 |
| P/E | 19.1 |
| P/CFO | 15.1 |
| Total Yield | 6.7% |
| Dividend Yield | 1.3% |
| FCF Yield 3Y Avg | 2.3% |
| D/E | 0.1 |
| Net D/E | 0.0 |
Returns
| Median | |
|---|---|
| Name | |
| 1M Rtn | -4.2% |
| 3M Rtn | -11.0% |
| 6M Rtn | -21.8% |
| 12M Rtn | -20.2% |
| 3Y Rtn | 39.7% |
| 1M Excs Rtn | -4.9% |
| 3M Excs Rtn | -12.8% |
| 6M Excs Rtn | -27.9% |
| 12M Excs Rtn | -39.6% |
| 3Y Excs Rtn | -21.6% |
Comparison Analyses
Segment Financials
Revenue by Segment| $ Mil | 2025 | 2024 | 2023 | 2022 | 2021 |
|---|---|---|---|---|---|
| Software | 29,962 | 27,085 | 25,011 | 23,629 | 23,426 |
| Consulting | 21,055 | 20,692 | 20,884 | 20,058 | 17,844 |
| Infrastructure | 15,718 | 14,020 | 14,593 | 15,288 | 14,188 |
| Financing | 737 | 713 | 741 | 645 | 774 |
| Other revenue | 65 | 207 | 235 | 135 | 335 |
| Other-divested businesses | -2 | 35 | 397 | 774 | 785 |
| Total | 67,535 | 62,752 | 61,861 | 60,529 | 57,352 |
| $ Mil | 1998 |
|---|---|
| Global Services | 3,757 |
| Server | 2,842 |
| Software | 2,588 |
| Global Financing | 1,165 |
| Technology | 955 |
| Enterprise Investments | -616 |
| Personal Systems | -992 |
| Total | 9,699 |
| $ Mil | 2024 | 2023 | 2022 | 2021 | 2020 |
|---|---|---|---|---|---|
| Software | 60,707 | 61,141 | 55,822 | 58,420 | 58,558 |
| Consulting | 14,826 | 14,342 | 14,261 | 11,914 | 10,548 |
| Cash and marketable securities | 14,243 | 12,907 | 12,463 | ||
| Financing | 14,075 | 14,409 | 15,757 | 16,880 | 24,974 |
| Infrastructure | 12,161 | 11,991 | 12,243 | 11,766 | 12,378 |
| Pension assets | 7,492 | 7,506 | 7,557 | ||
| Deferred tax assets | 6,850 | 6,468 | 8,175 | ||
| Other | 3,647 | 3,563 | 3,514 | ||
| Operating right-of-use assets | 2,001 | 2,085 | 2,368 | ||
| Plant, other property and equipment | 1,952 | 1,838 | 2,449 | ||
| Other-divested businesses | 74 | 19 | 254 | ||
| Elimination of internal transactions | -853 | -1,028 | -4,686 | ||
| Notes and accounts receivable | 1,655 | ||||
| Total assets of discontinued operations | 15,764 | ||||
| Total | 137,175 | 135,241 | 98,083 | 98,980 | 155,971 |
Price Behavior
| Market Price | $214.19 | |
| Market Cap ($ Bil) | 201.0 | |
| First Trading Date | 01/02/1962 | |
| Distance from 52W High | -34.9% | |
| 50 Days | 200 Days | |
| DMA Price | $260.07 | $269.64 |
| DMA Trend | indeterminate | up |
| Distance from DMA | -17.6% | -20.6% |
| 3M | 1YR | |
| Volatility | 75.1% | 48.0% |
| Downside Capture | 11.62 | 109.89 |
| Upside Capture | -24.33 | 68.62 |
| Correlation (SPY) | 4.1% | 22.4% |
| 1M | 2M | 3M | 6M | 1Y | 3Y | |
|---|---|---|---|---|---|---|
| Beta | 0.62 | 0.56 | 0.50 | 1.01 | 0.95 | 0.74 |
| Up Beta | -0.32 | -2.11 | -0.74 | -0.13 | 0.43 | 0.55 |
| Down Beta | 1.46 | 1.45 | 0.79 | 1.18 | 1.11 | 0.77 |
| Up Capture | 29% | 166% | 112% | 123% | 92% | 82% |
| Bmk +ve Days | 11 | 24 | 40 | 67 | 140 | 429 |
| Stock +ve Days | 9 | 21 | 34 | 64 | 133 | 423 |
| Down Capture | 86% | 44% | 113% | 146% | 116% | 93% |
| Bmk -ve Days | 10 | 17 | 23 | 58 | 112 | 321 |
| Stock -ve Days | 12 | 20 | 29 | 61 | 119 | 327 |
[1] Upside and downside betas calculated using positive and negative benchmark daily returns respectively
Based On 1-Year Data
| Annualized Return | Annualized Volatility | Sharpe Ratio | Correlation with IBM | |
|---|---|---|---|---|
| IBM | -22.2% | 48.5% | -0.35 | - |
| Sector ETF (XLK) | 35.9% | 24.8% | 1.19 | 17.2% |
| Equity (SPY) | 17.6% | 12.7% | 1.00 | 22.4% |
| Gold (GLD) | 19.2% | 28.1% | 0.61 | -2.4% |
| Commodities (DBC) | 34.7% | 19.1% | 1.42 | -5.7% |
| Real Estate (VNQ) | 13.8% | 14.1% | 0.69 | 17.7% |
| Bitcoin (BTCUSD) | -45.4% | 42.9% | -1.29 | 6.7% |
Smart multi-asset allocation framework can stack odds in your favor. Learn How
Based On 5-Year Data
| Annualized Return | Annualized Volatility | Sharpe Ratio | Correlation with IBM | |
|---|---|---|---|---|
| IBM | 14.3% | 29.9% | 0.48 | - |
| Sector ETF (XLK) | 19.4% | 25.6% | 0.68 | 30.3% |
| Equity (SPY) | 12.8% | 17.1% | 0.58 | 35.8% |
| Gold (GLD) | 17.0% | 18.4% | 0.75 | 2.3% |
| Commodities (DBC) | 9.6% | 19.5% | 0.38 | 8.2% |
| Real Estate (VNQ) | 3.0% | 18.9% | 0.06 | 30.9% |
| Bitcoin (BTCUSD) | 15.7% | 53.4% | 0.47 | 12.1% |
Smart multi-asset allocation framework can stack odds in your favor. Learn How
Based On 10-Year Data
| Annualized Return | Annualized Volatility | Sharpe Ratio | Correlation with IBM | |
|---|---|---|---|---|
| IBM | 7.8% | 28.0% | 0.31 | - |
| Sector ETF (XLK) | 24.1% | 24.8% | 0.88 | 44.3% |
| Equity (SPY) | 14.9% | 17.9% | 0.71 | 52.3% |
| Gold (GLD) | 11.3% | 16.1% | 0.57 | 2.9% |
| Commodities (DBC) | 7.2% | 17.9% | 0.32 | 17.7% |
| Real Estate (VNQ) | 5.2% | 20.7% | 0.21 | 42.8% |
| Bitcoin (BTCUSD) | 58.3% | 66.2% | 0.98 | 9.1% |
Smart multi-asset allocation framework can stack odds in your favor. Learn How
Returns Analyses
Earnings Returns History
Updated 7/25/2026| Forward Returns | |||
|---|---|---|---|
| Earnings Date | 1D Returns | 5D Returns | 21D Returns |
| 7/22/2026 | 0.4% | ||
| 4/22/2026 | -8.3% | -9.8% | 1.2% |
| 1/28/2026 | 5.1% | -1.7% | -17.9% |
| 10/22/2025 | -0.9% | 7.2% | 1.6% |
| 7/23/2025 | -7.6% | -7.7% | -14.5% |
| 4/23/2025 | -6.6% | -1.5% | 6.0% |
| 1/29/2025 | 13.0% | 15.2% | 11.1% |
| 10/23/2024 | -6.2% | -12.0% | -3.7% |
| ... | |||
| SUMMARY STATS | |||
| # Positive | 13 | 11 | 15 |
| # Negative | 12 | 13 | 9 |
| Median Positive | 4.7% | 5.6% | 5.0% |
| Median Negative | -6.5% | -7.7% | -6.4% |
| Max Positive | 13.0% | 15.2% | 20.7% |
| Max Negative | -9.9% | -12.0% | -17.9% |
| Forward Returns | |||
|---|---|---|---|
| Earnings Date | 1D Returns | 5D Returns | 21D Returns |
| 7/22/2026 | 0.4% | ||
| 4/22/2026 | -8.3% | -9.8% | 1.2% |
| 1/28/2026 | 5.1% | -1.7% | -17.9% |
| 10/22/2025 | -0.9% | 7.2% | 1.6% |
| 7/23/2025 | -7.6% | -7.7% | -14.5% |
| 4/23/2025 | -6.6% | -1.5% | 6.0% |
| 1/29/2025 | 13.0% | 15.2% | 11.1% |
| 10/23/2024 | -6.2% | -12.0% | -3.7% |
| 7/24/2024 | 4.3% | 4.4% | 7.4% |
| 4/24/2024 | -8.3% | -10.7% | -6.4% |
| 1/24/2024 | 9.5% | 5.6% | 7.8% |
| 10/25/2023 | 4.9% | 6.1% | 14.5% |
| 7/19/2023 | 2.1% | 4.1% | 5.0% |
| 4/19/2023 | 0.0% | -0.4% | 1.2% |
| 1/25/2023 | -4.5% | -4.0% | -6.1% |
| 10/19/2022 | 4.7% | 10.2% | 20.7% |
| 7/18/2022 | -5.2% | -6.9% | 0.1% |
| 4/19/2022 | 7.1% | 5.5% | 4.2% |
| 1/24/2022 | 5.7% | 3.7% | -4.1% |
| 10/20/2021 | -9.6% | -11.8% | -13.2% |
| 7/19/2021 | 1.5% | 3.5% | 4.5% |
| 4/19/2021 | 3.8% | 6.3% | 9.3% |
| 1/21/2021 | -9.9% | -8.8% | -7.0% |
| 10/19/2020 | -6.5% | -10.6% | -4.9% |
| 7/20/2020 | -0.2% | -0.1% | 0.1% |
| SUMMARY STATS | |||
| # Positive | 13 | 11 | 15 |
| # Negative | 12 | 13 | 9 |
| Median Positive | 4.7% | 5.6% | 5.0% |
| Median Negative | -6.5% | -7.7% | -6.4% |
| Max Positive | 13.0% | 15.2% | 20.7% |
| Max Negative | -9.9% | -12.0% | -17.9% |
SEC Filings
Expand for More| Report Date | Filing Date | Filing |
|---|---|---|
| 06/30/2026 | 07/23/2026 | 10-Q |
| 03/31/2026 | 04/23/2026 | 10-Q |
| 12/31/2025 | 02/24/2026 | 10-K |
| 09/30/2025 | 10/23/2025 | 10-Q |
| 06/30/2025 | 07/24/2025 | 10-Q |
| 03/31/2025 | 04/24/2025 | 10-Q |
| 12/31/2024 | 02/25/2025 | 10-K |
| 09/30/2024 | 10/30/2024 | 10-Q |
| 06/30/2024 | 07/30/2024 | 10-Q |
| 03/31/2024 | 04/30/2024 | 10-Q |
| 12/31/2023 | 02/26/2024 | 10-K |
| 09/30/2023 | 10/31/2023 | 10-Q |
| 06/30/2023 | 07/25/2023 | 10-Q |
| 03/31/2023 | 04/25/2023 | 10-Q |
| 12/31/2022 | 02/28/2023 | 10-K |
| 09/30/2022 | 10/25/2022 | 10-Q |
| Report Date | Filing Date | Filing |
|---|---|---|
| 06/30/2026 | 07/23/2026 | 10-Q |
| 03/31/2026 | 04/23/2026 | 10-Q |
| 12/31/2025 | 02/24/2026 | 10-K |
| 09/30/2025 | 10/23/2025 | 10-Q |
| 06/30/2025 | 07/24/2025 | 10-Q |
| 03/31/2025 | 04/24/2025 | 10-Q |
| 12/31/2024 | 02/25/2025 | 10-K |
| 09/30/2024 | 10/30/2024 | 10-Q |
| 06/30/2024 | 07/30/2024 | 10-Q |
| 03/31/2024 | 04/30/2024 | 10-Q |
| 12/31/2023 | 02/26/2024 | 10-K |
| 09/30/2023 | 10/31/2023 | 10-Q |
| 06/30/2023 | 07/25/2023 | 10-Q |
| 03/31/2023 | 04/25/2023 | 10-Q |
| 12/31/2022 | 02/28/2023 | 10-K |
| 09/30/2022 | 10/25/2022 | 10-Q |
| 06/30/2022 | 07/25/2022 | 10-Q |
| 03/31/2022 | 04/26/2022 | 10-Q |
| 12/31/2021 | 02/22/2022 | 10-K |
| 09/30/2021 | 11/05/2021 | 10-Q |
| 06/30/2021 | 07/27/2021 | 10-Q |
| 03/31/2021 | 04/27/2021 | 10-Q |
| 12/31/2020 | 02/23/2021 | 10-K |
| 09/30/2020 | 10/27/2020 | 10-Q |
| 06/30/2020 | 07/28/2020 | 10-Q |
| 03/31/2020 | 04/28/2020 | 10-Q |
| 12/31/2019 | 02/25/2020 | 10-K |
| 09/30/2019 | 10/30/2019 | 10-Q |
Investor Activity (13F)
Updated Jul 25, 2026Active managers (13F portfolio over $250M, at least 3 holdings) with a position over $5M that is either over 10% of their portfolio or held in a concentrated book of 50 or fewer total positions. Index/ETF, sovereign, bank, community-bank and charitable/donor-advised filers are excluded.
IBM Trade Sentinel
Avoid
CONVICTION RATIONALE
A severe Q2 execution failure, resulting in a sharp revenue slowdown to 1.1% growth and a cut in full-year guidance, suggests the company is losing its share of client budgets. Management admitted they 'faltered' in adapting to a capex shift toward AI infrastructure. Until there is clear evidence of recovery, the risk of further underperformance is high.
STOCK ARCHETYPE
Enterprise Technology Platform & ServicesRevenue = (Recurring Software Base * Subscription/Consumption Rate) + (Transactional Deal Volume * Average Deal Size) + (Consulting Projects * Billing Rate) + (Hardware Units * ASP) High-margin software sales, particularly large, high-value Enterprise License Agreements (ELAs) that bundle transaction processing and other software products.
INVESTMENT THESIS
Evidence suggests IBM's core, high-margin businesses are being deprioritized as clients shift spending to foundational AI infrastructure from other vendors.
- Annual Recurring Revenue (ARR) was $24.6 billion, up 8% year-over-year.
- The z17 mainframe cycle is performing at nearly 130% program-to-program.
- About 80% of annual software revenue is recurring and delivered healthy growth.
- Distributed Infrastructure backlog is at a record high of approximately $500 million.
PRIMARY RISK
The Q2 shortfall, where 'tens of large deals failed to close,' may not be a one-time event but rather the first sign of a structural loss of relevance in the new AI-driven IT spending cycle.
- Latest-quarter revenue growth collapsed to 1.1% from 9.5% in the prior quarter.
- Full-year 2026 revenue guidance was lowered to a range of 4% to 5%.
- Inventory grew 39.6% against 1.1% revenue growth, a 38.5 point divergence.
- Transactional software revenue was down high single digits in the second quarter.
- Infrastructure segment revenue declined 7% in the second quarter.
| KPI | Status | Rationale |
|---|---|---|
| Software Revenue Growth | 5% year-over-year growth in Q2 2026 - Decelerating | Software, representing nearly 45% of total revenue, has seen its growth slow significantly. Management attributes the Q2 shortfall to delayed large deals in a 'CapEx-sensitive area of the portfolio,' noting that the 80% of software revenue that is recurring delivered 'healthy growth.' The transactional portion, however, was down high single digits. |
| Infrastructure Revenue Growth | 7% year-over-year decline in Q2 2026 - Decelerating | The Infrastructure segment's decline was driven by a shortfall in the IBM Z mainframe business, which management stated was 'below our expectations.' This was attributed to clients shifting capital expenditures, the same dynamic that affected Software. Management asserts the z17 mainframe is having its best cycle in history and sees no evidence of clients migrating away. In contrast, the Distributed Infrastructure sub-segment posted record growth of 37%. |
| Annual Recurring Revenue (ARR) | $24.6 billion (Q2 FY2026) | Measures the performance and predictability of the company's subscription and consumption-based software business, which constitutes about 80% of total software revenue. |
| Inventory-versus-Revenue Growth Divergence | 38.5 percentage points (Q2 FY2026) | A significant divergence where inventory grows much faster than revenue can signal weakening demand or execution issues, as products are being built but not sold at the same pace. |
| IBM Z Program-to-Program Performance | Nearly 130% (Q2 FY2026) | Compares the revenue of the current mainframe cycle (z17) to the same point in the prior cycle (a recently discussed product). A value of nearly 130% indicates a very strong product cycle and robust demand for the company's highest-value infrastructure. |
Recurring Revenue Stability vs. Transactional Collapse
BULL VIEW
The 8% growth in the $24.6 billion recurring revenue base provides a stable foundation that the market is ignoring, allowing time for the company to close the large deals that slipped due to a temporary capex scramble.
CORE TENSION
Can the stable 80% recurring software business offset the collapse in the transactional business, which the market punished with a -10.0% post-earnings stock reaction in April?
PREVAILING SENTIMENT
The latest evidence favors the bears. The Q2 revenue miss and guidance cut were driven entirely by the transactional shortfall, which management admitted they failed to anticipate.
BEAR VIEW
The sharp, high-single-digit decline in the transactional business, which is tied to high-value mainframes and software, signals that IBM is losing the most critical, forward-looking part of the enterprise IT budget.
| Timeline | Event & Metric To Watch |
|---|---|
9/7/2026 | Peer Outperformance Signals Share Loss Watch: Oracle (9/7) and Accenture (9/24) earnings reports, specifically their growth and commentary on IT consulting and enterprise software demand. |
9/24/2026 | Accenture Earnings Report Watch: Peer Accenture (ACN) is scheduled to report earnings. |
10/21/2026 | Continued Sales Execution Failure Watch: Whether management reaffirms or lowers the revised 4-5% revenue growth guidance for 2026 during the Q3 earnings call. |
10/27/2026 | Microsoft Earnings Report Watch: Peer Microsoft (MSFT) is scheduled to report earnings. |
No set date | Inventory Risk Materializes Watch: Any commentary on inventory levels, write-downs, or gross margin pressure in the Q3 earnings report or subsequent filings. |
No set date | Securities Litigation Commences Watch: Press releases or SEC filings announcing the filing of a formal securities class action lawsuit against the company. |
| Date | Event | Stock Impact |
|---|---|---|
2026-07-14 | Q2 Shortfall Pre-Announced Details: The company reported preliminary Q2 results, citing a shortfall and admitting it "did not anticipate the magnitude of the capex reprioritization." The stock fell 25.2% on the news. | -27.2% $290.23 -> $211.20 |
2026-06-02 | Analyst Lifts Price Target Details: An analyst note raised its price target on the company, arguing that AI-driven disruption fears had proved unfounded and citing underlying momentum. | -4.6% $320.42 -> $305.63 |
2026-04-22 | Negative Q1 2026 Earnings Reaction Details: Following the Q1 2026 earnings report, the stock had a sharply negative two-day reaction of -10.0%. | -9.6% $253.81 -> $229.39 |
2026-03-02 | Stock Plunges on AI Threat Details: A press report noted the stock plummeted 20.6% over the prior three months due to a development in AI from a competitor that could threaten core legacy businesses. | +2.1% $238.46 -> $243.49 |
2026-02-10 | New AI-Powered Storage Launched Details: IBM introduced a new FlashSystem portfolio, including three new enterprise storage systems, powered by Agentic AI to reduce storage management efforts. | -7.4% $292.51 -> $270.82 |
2026-01-28 | Positive Q4 2025 Earnings Reaction Details: The company reported strong 2025 results, leading to a positive two-day stock reaction of 5.0% around the earnings call. | +5.2% $290.06 -> $305.24 |
Position Sizing
2% - 4%
REDUCED POSITION
Sizing is volatility-based: IBM trades at roughly 42% annualized options-implied volatility versus about 14% for the S&P 500 (3.1x the market), around the 90th percentile of its own trailing year. A 2% - 4% position keeps a single-name swing of that size within a diversified portfolio's risk budget.
Diversification Alternatives
MSFT - Microsoft
Hyperscale AI PlatformMicrosoft offers direct exposure to the foundational AI infrastructure buildout, with capex of $97.2 billion versus IBM's $1.7 billion. Its Intelligent Cloud segment grew 28% in constant currency.
ORCL - Oracle
Enterprise Software PeerOracle provides a more direct peer comparison in enterprise software and cloud infrastructure, but has demonstrated much stronger growth, with trailing-twelve-month revenue up 17.4% versus IBM's 7.9%.
IBM is a software-centric enterprise tech incumbent whose recent execution stumble in its high-value transactional business has overshadowed strong underlying mainframe demand and a large recurring revenue base.
IBM has repositioned itself around hybrid cloud and AI, with software now comprising nearly 45% of revenue. While 80% of this software revenue is recurring and growing, the company's Q2 2026 performance was derailed by a shortfall in its transactional software and mainframe business. Management attributes this to a shift in client capex priorities toward other AI infrastructure, revealing a vulnerability in the timing of its large enterprise deals. The core mainframe cycle (z17) remains historically strong, but the company must now prove it can adapt its go-to-market to close these critical deals.
A software growth expectation in a range of 6% to 8% for the full year, evidence of the slipped second quarter deals closing, and continued strength in the z17 program-to-program metric at nearly 130%.
Continued weakness in transactional software revenue, a decline in the z17 program-to-program metric, or guidance being lowered again, suggesting the Q2 issue was not a one-time event.
Broader market commentary on long-term AI trends; the key issue for IBM in the next 6-12 months is near-term execution and client budget allocation.
Repricing Catalyst
The pre-announcement of a Q2 2026 revenue shortfall, which management attributed to a failure to close tens of large, capex-sensitive deals as clients reprioritized spending. This led to a significant stock price decline and multiple securities fraud investigations announced in press reports in July 2026.
Software
$30.0B TTM (44% of Total)What It Is
Sells hybrid cloud and AI platforms, data and automation software, and transaction processing software to enterprise clients. Offerings include Red Hat for hybrid cloud, watsonx for AI, and software for the IBM Z mainframe.
Who Pays & How
Enterprises pay for software to build and run applications, manage and govern AI, orchestrate operations, and process mission-critical transactions. They choose IBM for its incumbency, deep industry expertise, and its ability to manage complex hybrid environments.
Competition
Consulting
$21.1B TTM (31% of Total)What It Is
Provides business transformation services to enterprise clients, integrating strategy, experience design, technology, and operations expertise across various industries.
Who Pays & How
Enterprises pay for consulting services to assist with business transformation initiatives, including application modernization, data transformation, and cybersecurity services, particularly as they move to deploy AI at scale.
Competition
Infrastructure
$15.7B TTM (23% of Total)What It Is
Sells on-premises and cloud-based server and storage solutions to enterprise clients, including its IBM Z mainframe systems and Power servers.
Who Pays & How
Enterprises pay for infrastructure to run mission-critical and AI workloads that require high security, scalability, and reliability. The IBM Z mainframe, for example, runs over 70% of the world's transaction volume by value.
Competition
Financing
$737M TTM (1% of Total)What It Is
Provides client and commercial financing to facilitate clients' acquisition of IBM's hardware, software, and services.
Who Pays & How
Clients use financing to acquire IBM's technology solutions. The segment competes based on interest rates, IT product experience, and contract flexibility.
Competition
International Business Machines — Investor Video Playlist
Industry Resources
| Information Technology Resources |
| TechCrunch |
| Wired |
| CIO |
| MIT Technology Review |
| Gartner Insights |
| Ars Technica |
| IT Consulting & Other Services Resources |
| IDC |
| Forrester |
| Consultancy.org |
External Quote Links
| Y Finance | Barrons |
| TradingView | Morningstar |
| SeekingAlpha | ValueLine |
| Motley Fool | Robinhood |
| CNBC | Etrade |
| MarketWatch | Unusual Whales |
| YCharts | Perplexity Finance |
| FinViz |
Prefer one of these to Trefis? Tell us why.