International Business Machines (IBM)
Market Price (6/5/2026): $299.98 | Market Cap: $281.5 BilSector: Information Technology | Industry: IT Consulting & Other Services
International Business Machines (IBM)
Market Price (6/5/2026): $299.98Market Cap: $281.5 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 6.0%, Dividend Yield is 2.2% Attractive cash flow generationCFO/Rev LTMCash Flow from Operations / Revenue (Sales), Last Twelve Months (LTM) is 20%, FCF/Rev LTMFree Cash Flow / Revenue (Sales), Last Twelve Months (LTM) is 18%, CFO LTM is 14 Bil, FCF LTM is 12 Bil Stock buyback supportStock Buyback 3Y Total is 2.3 Bil Low stock price volatilityVol 12M is 39% Megatrend and thematic driversMegatrends include Artificial Intelligence, Cloud Computing, Cybersecurity, and Crypto & Blockchain. Show more. | 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 6.0%, Dividend Yield is 2.2% |
| Attractive cash flow generationCFO/Rev LTMCash Flow from Operations / Revenue (Sales), Last Twelve Months (LTM) is 20%, FCF/Rev LTMFree Cash Flow / Revenue (Sales), Last Twelve Months (LTM) is 18%, CFO LTM is 14 Bil, FCF LTM is 12 Bil |
| Stock buyback supportStock Buyback 3Y Total is 2.3 Bil |
| Low stock price volatilityVol 12M is 39% |
| Megatrend and thematic driversMegatrends include Artificial Intelligence, Cloud Computing, Cybersecurity, and Crypto & Blockchain. Show more. |
| 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 gained about 25% since 2/28/2026 because of the following key factors:
1. IBM's strong first-quarter 2026 financial performance significantly exceeded analyst expectations and included an optimistic full-year outlook. The company reported Q1 2026 revenue of $15.9 billion, marking a 9% increase year-over-year (6% at constant currency), surpassing estimated revenues of $15.7 billion. Diluted earnings per share from continuing operations were $1.28, while adjusted EPS reached $1.91, beating the consensus estimate by $0.09 to $0.10. Software revenue was a key driver, growing 11% (8% at constant currency), contributing to a robust free cash flow of $2.2 billion, an increase of $0.3 billion year-over-year. IBM reaffirmed its 2026 guidance, projecting over 5% constant currency revenue growth and an approximately $1 billion increase in year-over-year free cash flow. Additionally, the board increased the quarterly cash dividend to $1.69 per share, marking the 31st consecutive year of dividend increases.
2. Strategic acquisitions and substantial investments in artificial intelligence (AI) and quantum computing have positioned IBM for future growth. In March 2026, IBM completed the $11.6 billion acquisition of Confluent, earlier than anticipated, aiming to integrate real-time data capabilities into its hybrid cloud and AI offerings. The company also announced its intent to acquire DataStax to enhance its watsonx portfolio for generative AI and the acquisition of HashiCorp for $6.4 billion to strengthen its hybrid cloud capabilities. Demonstrating a long-term commitment, IBM pledged over $10 billion to quantum computing investments through 2029, a strategy bolstered by a proposed $1 billion in funding from the U.S. Department of Commerce for superconducting foundry efforts. Furthermore, IBM and Red Hat launched "Project Lightwell," a $5 billion commitment to secure the open-source software supply chain with AI, and introduced the global AI Builders Challenge to foster AI skills among university students.
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Stock Movement Drivers
Fundamental Drivers
The 26.6% change in IBM stock from 2/28/2026 to 6/4/2026 was primarily driven by a 24.9% change in the company's P/E Multiple.| (LTM values as of) | 2282026 | 6042026 | Change |
|---|---|---|---|
| Stock Price ($) | 238.46 | 301.77 | 26.6% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 67,536 | 68,912 | 2.0% |
| Net Income Margin (%) | 15.7% | 15.6% | -0.5% |
| P/E Multiple | 21.1 | 26.3 | 24.9% |
| Shares Outstanding (Mil) | 936 | 938 | -0.2% |
| Cumulative Contribution | 26.6% |
Market Drivers
2/28/2026 to 6/4/2026| Return | Correlation | |
|---|---|---|
| IBM | 26.6% | |
| Market (SPY) | 10.7% | 17.4% |
| Sector (XLK) | 39.4% | 29.0% |
Fundamental Drivers
The -0.9% change in IBM stock from 11/30/2025 to 6/4/2026 was primarily driven by a -26.8% change in the company's P/E Multiple.| (LTM values as of) | 11302025 | 6042026 | Change |
|---|---|---|---|
| Stock Price ($) | 304.59 | 301.77 | -0.9% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 65,402 | 68,912 | 5.4% |
| Net Income Margin (%) | 12.1% | 15.6% | 29.1% |
| P/E Multiple | 36.0 | 26.3 | -26.8% |
| Shares Outstanding (Mil) | 934 | 938 | -0.5% |
| Cumulative Contribution | -0.9% |
Market Drivers
11/30/2025 to 6/4/2026| Return | Correlation | |
|---|---|---|
| IBM | -0.9% | |
| Market (SPY) | 11.4% | 30.2% |
| Sector (XLK) | 35.4% | 34.3% |
Fundamental Drivers
The 19.5% change in IBM stock from 5/31/2025 to 6/4/2026 was primarily driven by a 79.1% change in the company's Net Income Margin (%).| (LTM values as of) | 5312025 | 6042026 | Change |
|---|---|---|---|
| Stock Price ($) | 252.60 | 301.77 | 19.5% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 62,830 | 68,912 | 9.7% |
| Net Income Margin (%) | 8.7% | 15.6% | 79.1% |
| P/E Multiple | 42.8 | 26.3 | -38.5% |
| Shares Outstanding (Mil) | 928 | 938 | -1.1% |
| Cumulative Contribution | 19.5% |
Market Drivers
5/31/2025 to 6/4/2026| Return | Correlation | |
|---|---|---|
| IBM | 19.5% | |
| Market (SPY) | 29.9% | 32.0% |
| Sector (XLK) | 68.3% | 33.9% |
Fundamental Drivers
The 158.5% change in IBM stock from 5/31/2023 to 6/4/2026 was primarily driven by a 415.5% change in the company's Net Income Margin (%).| (LTM values as of) | 5312023 | 6042026 | Change |
|---|---|---|---|
| Stock Price ($) | 116.73 | 301.77 | 158.5% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 60,584 | 68,912 | 13.7% |
| Net Income Margin (%) | 3.0% | 15.6% | 415.5% |
| P/E Multiple | 57.8 | 26.3 | -54.4% |
| Shares Outstanding (Mil) | 908 | 938 | -3.3% |
| Cumulative Contribution | 158.5% |
Market Drivers
5/31/2023 to 6/4/2026| Return | Correlation | |
|---|---|---|
| IBM | 158.5% | |
| Market (SPY) | 88.3% | 38.0% |
| Sector (XLK) | 140.1% | 35.2% |
Price Returns Compared
| 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | Total [1] | |
|---|---|---|---|---|---|---|---|
| Returns | |||||||
| IBM Return | 16% | 11% | 22% | 39% | 38% | 5% | 215% |
| Peers Return | 44% | -31% | 52% | 31% | 17% | -0% | 129% |
| S&P 500 Return | 27% | -19% | 24% | 23% | 16% | 10% | 101% |
Monthly Win Rates [3] | |||||||
| IBM Win Rate | 58% | 50% | 67% | 75% | 50% | 67% | |
| Peers Win Rate | 67% | 28% | 68% | 63% | 48% | 40% | |
| S&P 500 Win Rate | 75% | 42% | 67% | 75% | 67% | 50% | |
Max Drawdowns [4] | |||||||
| IBM Max Drawdown | -18% | -17% | -15% | -17% | -20% | -31% | |
| Peers Max Drawdown | -11% | -40% | -17% | -20% | -34% | -29% | |
| 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 6/4/2026 (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
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Asset Allocation
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| 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)
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.
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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.
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International Business Machines (symbol: IBM) primarily sells its integrated solutions and services to other companies (B2B) rather than individuals. While the provided background information does not list specific customer company names, it indicates that IBM's major customers operate in the following industries:- Banking
- Airlines
- Retail
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International Business Machines (symbol: IBM) has the following major suppliers:
- GlobalFoundries (symbol: GFS)
- Micron Technology (symbol: MU)
- Western Digital (symbol: WDC)
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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.
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International Business Machines (IBM) faces several key risks to its business, primarily stemming from intense market competition, pervasive cybersecurity threats, and challenges in the adoption and governance of artificial intelligence (AI).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.
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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.
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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
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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.
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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.
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Peer Comparisons
| Peers to compare with: |
Financials
| Median | |
|---|---|
| Name | |
| Mkt Price | 277.78 |
| Mkt Cap | 1,702.9 |
| Rev LTM | 195,192 |
| Op Inc LTM | 53,050 |
| FCF LTM | 12,377 |
| FCF 3Y Avg | 16,808 |
| CFO LTM | 86,022 |
| CFO 3Y Avg | 70,680 |
Growth & Margins
| Median | |
|---|---|
| Name | |
| Rev Chg LTM | 14.5% |
| Rev Chg 3Y Avg | 11.2% |
| Rev Chg Q | 17.5% |
| QoQ Delta Rev Chg LTM | 3.9% |
| Op Inc Chg LTM | 18.3% |
| Op Inc Chg 3Y Avg | 18.2% |
| Op Mgn LTM | 25.5% |
| Op Mgn 3Y Avg | 24.0% |
| QoQ Delta Op Mgn LTM | 0.3% |
| CFO/Rev LTM | 28.5% |
| CFO/Rev 3Y Avg | 29.0% |
| FCF/Rev LTM | 16.3% |
| FCF/Rev 3Y Avg | 17.1% |
Valuation
| Median | |
|---|---|
| Name | |
| Mkt Cap | 1,702.9 |
| P/S | 7.0 |
| P/Op Inc | 26.9 |
| P/EBIT | 22.8 |
| P/E | 27.2 |
| P/CFO | 19.5 |
| Total Yield | 4.3% |
| Dividend Yield | 0.8% |
| FCF Yield 3Y Avg | 2.8% |
| D/E | 0.1 |
| Net D/E | 0.0 |
Returns
| Median | |
|---|---|
| Name | |
| 1M Rtn | 2.1% |
| 3M Rtn | 17.2% |
| 6M Rtn | 5.0% |
| 12M Rtn | 19.5% |
| 3Y Rtn | 115.8% |
| 1M Excs Rtn | -2.4% |
| 3M Excs Rtn | 6.2% |
| 6M Excs Rtn | -6.3% |
| 12M Excs Rtn | -7.0% |
| 3Y Excs Rtn | 40.4% |
Comparison Analyses
Segment Financials
Revenue by Segment| $ Mil | 2025 | 2024 | 2023 | 2022 | 2021 |
|---|---|---|---|---|---|
| Software | 27,085 | 25,011 | 25,037 | 23,426 | 22,927 |
| Consulting | 20,692 | 20,884 | 19,107 | 17,844 | 16,257 |
| Infrastructure | 14,020 | 14,593 | 15,288 | 14,188 | 14,533 |
| Financing | 713 | 741 | 645 | 774 | 975 |
| Other revenue | 207 | 235 | 135 | 335 | 387 |
| Other-divested businesses | 35 | 397 | 318 | 785 | 101 |
| Total | 62,752 | 61,861 | 60,530 | 57,352 | 55,180 |
Price Behavior
| Market Price | $301.77 | |
| Market Cap ($ Bil) | 283.2 | |
| First Trading Date | 01/02/1962 | |
| Distance from 52W High | -8.3% | |
| 50 Days | 200 Days | |
| DMA Price | $243.66 | $268.78 |
| DMA Trend | indeterminate | indeterminate |
| Distance from DMA | 23.8% | 12.3% |
| 3M | 1YR | |
| Volatility | 52.0% | 39.1% |
| Downside Capture | 171.91 | 134.00 |
| Upside Capture | 166.53 | 112.41 |
| Correlation (SPY) | 19.2% | 32.1% |
| 1M | 2M | 3M | 6M | 1Y | 3Y | |
|---|---|---|---|---|---|---|
| Beta | -0.28 | 0.08 | 0.50 | 1.08 | 1.01 | 0.75 |
| Up Beta | -6.27 | -1.81 | -0.80 | 0.05 | 0.62 | 0.58 |
| Down Beta | 0.59 | -0.99 | 0.05 | 1.20 | 1.11 | 0.75 |
| Up Capture | 318% | 156% | 148% | 131% | 106% | 85% |
| Bmk +ve Days | 13 | 28 | 36 | 67 | 141 | 432 |
| Stock +ve Days | 12 | 24 | 35 | 67 | 138 | 427 |
| Down Capture | -106% | 171% | 92% | 155% | 116% | 92% |
| Bmk -ve Days | 7 | 13 | 27 | 57 | 109 | 318 |
| Stock -ve Days | 8 | 17 | 28 | 57 | 112 | 323 |
[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 | 16.8% | 39.0% | 0.48 | - |
| Sector ETF (XLK) | 64.6% | 20.9% | 2.29 | 33.9% |
| Equity (SPY) | 28.6% | 11.8% | 1.82 | 31.9% |
| Gold (GLD) | 33.3% | 26.6% | 1.05 | -2.5% |
| Commodities (DBC) | 39.4% | 18.8% | 1.63 | -6.0% |
| Real Estate (VNQ) | 12.0% | 13.3% | 0.60 | 16.2% |
| Bitcoin (BTCUSD) | -40.5% | 42.3% | -1.11 | 13.3% |
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Based On 5-Year Data
| Annualized Return | Annualized Volatility | Sharpe Ratio | Correlation with IBM | |
|---|---|---|---|---|
| IBM | 21.6% | 27.0% | 0.73 | - |
| Sector ETF (XLK) | 23.8% | 24.9% | 0.84 | 36.2% |
| Equity (SPY) | 14.1% | 17.0% | 0.65 | 40.2% |
| Gold (GLD) | 18.3% | 18.0% | 0.82 | 3.6% |
| Commodities (DBC) | 9.9% | 19.4% | 0.40 | 10.5% |
| Real Estate (VNQ) | 3.2% | 18.8% | 0.07 | 33.1% |
| Bitcoin (BTCUSD) | 10.4% | 54.7% | 0.39 | 13.4% |
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Based On 10-Year Data
| Annualized Return | Annualized Volatility | Sharpe Ratio | Correlation with IBM | |
|---|---|---|---|---|
| IBM | 12.2% | 26.5% | 0.46 | - |
| Sector ETF (XLK) | 25.7% | 24.5% | 0.94 | 48.9% |
| Equity (SPY) | 15.6% | 17.9% | 0.74 | 56.1% |
| Gold (GLD) | 13.4% | 16.0% | 0.69 | 2.6% |
| Commodities (DBC) | 7.3% | 17.9% | 0.33 | 19.8% |
| Real Estate (VNQ) | 5.6% | 20.7% | 0.23 | 44.8% |
| Bitcoin (BTCUSD) | 63.9% | 66.9% | 1.03 | 9.7% |
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Returns Analyses
Earnings Returns History
Updated 6/3/2026| Forward Returns | |||
|---|---|---|---|
| Earnings Date | 1D Returns | 5D Returns | 21D Returns |
| 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% |
| ... | |||
| SUMMARY STATS | |||
| # Positive | 12 | 11 | 15 |
| # Negative | 12 | 13 | 9 |
| Median Positive | 4.8% | 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 |
|---|---|---|
| 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 |
Recent Forward Guidance
Updated 5/31/2026Latest: Q1 2026 Earnings Reported 4/22/2026
| Forward Guidance | Guidance Change | ||||||
|---|---|---|---|---|---|---|---|
| Metric | Low | Mid | High | % Chg | % Delta | Change | Prior |
| 2026 Revenue Growth | 5.0% | 0 | Affirmed | Guidance: 5.0% for 2026 | |||
| 2026 Free Cash Flow | 1.00 Bil | -93.6% | Lowered | Guidance: 15.70 Bil for 2026 | |||
Prior: Q4 2025 Earnings Reported 1/28/2026
| Forward Guidance | Guidance Change | ||||||
|---|---|---|---|---|---|---|---|
| Metric | Low | Mid | High | % Chg | % Delta | Change | Prior |
| 2026 Revenue Growth | 5.0% | 0.0% | 0.0% | Affirmed | Guidance: 5.0% for 2025 | ||
| 2026 Free Cash Flow | 15.70 Bil | 12.1% | Raised | Guidance: 14.00 Bil for 2025 | |||
IBM Trade Sentinel
UNDERWEIGHT (Score 3-4)
CONVICTION RATIONALE
The investment case has a negative risk/reward skew, with potential downside meaningfully outweighing the upside. The core turnaround thesis is challenged by a 'CONTESTED' competitive moat where IBM is losing ground to structural threats in its key growth market. While the current quarter was strong, the market's negative reaction highlights the fragility of the narrative. The stock's valuation appears to be a 'Value Trap' rather than a 'Cheap' opportunity, warranting an UNDERWEIGHT rating.
STOCK ARCHETYPE
Primary: Turnaround / Deep Value, Secondary: Transition / Profit PivotIBM's core investment case rests on the successful execution of its strategic pivot to hybrid cloud and AI, fitting the 'Turnaround' archetype. The goal of this pivot is to shift the revenue mix to high-margin software, which aligns with the 'Transition / Profit Pivot' model focused on margin expansion.
INVESTMENT THESIS
The investment thesis is centered on IBM's transformation into a platform-centric hybrid cloud and AI company. The continued growth of high-margin software, led by Red Hat and the watsonx platform, is fundamentally altering the company's profitability profile, justifying a valuation re-rating from a legacy IT services multiple to a software-centric one.
- Software segment revenue grew 11% in Q1 2026, representing 45% of total revenue, up from 39% in FY2022.
- Software Annual Recurring Revenue (ARR) reached $24.6 Billion in Q1 2026, up 10% YoY, providing a predictable, high-margin revenue base.
- The Data & AI software sub-segment accelerated to 19% YoY growth in Q1, indicating strong demand for AI solutions.
- Gross profit margin increased by 1.1 points to 57.7% in Q1, driven by this favorable mix shift.
PRIMARY RISK
The primary risk is that IBM's core growth engine, Red Hat OpenShift, loses the battle for the hybrid cloud management plane to integrated offerings from hyperscalers like Microsoft Azure Arc and Google Anthos. If enterprises opt for these 'good enough', bundled solutions, Red Hat's growth will decelerate, and the entire turnaround thesis would be compromised, reverting IBM to a low-growth legacy provider.
- The 'competitive_positioning' data identifies AWS as a 'STRUCTURAL' threat where IBM's win/loss status is 'LOSING'.
- The negative stock reaction to a strong Q1, driven by software growth deceleration and a lack of a guidance raise, indicates high investor sensitivity to this competitive threat.
| KPI | Threshold | Rationale |
|---|---|---|
| Software Revenue Growth (Constant Currency) | >=10% | This is the primary engine of the bull thesis. The market punished the stock when this metric decelerated to 8%. It must re-accelerate to and sustain a double-digit growth rate to validate the transformation narrative. |
| Consulting Revenue Growth (Constant Currency) | >3% | While not the growth engine, this large segment (33% of revenue) cannot be a major drag. Growth of only 1% in Q1 is a headwind. It needs to stabilize in the low-to-mid single digits to support the overall company growth targets. |
| Consulting Book-to-Bill Ratio | >1.05x | A leading indicator for future consulting revenue. The current TTM ratio of 1.04x is stable but uninspiring. A sustained higher ratio is needed to signal that demand for AI and modernization projects is strengthening. |
The Hybrid Cloud Platform War
BULL VIEW
Software mix shift to Red Hat and watsonx is driving durable margin expansion. Software revenue growth re-accelerating to over 10% will validate the turnaround and justify a re-rating.
CORE TENSION
Is IBM's Red Hat the essential platform for hybrid cloud, or will bundled 'good enough' offerings from hyperscalers (Azure Arc, Google Anthos) commoditize its value and stall growth?
PREVAILING SENTIMENT
The stock fell over 6% despite a Q1 beat because Software revenue growth decelerated to 8% (constant currency), missing the 10%+ market expectation and validating bear concerns about competition.
BEAR VIEW
Hyperscalers are bundling hybrid tools, leading to share loss. Decelerating Red Hat growth proves the turnaround is failing, reverting IBM to a low-growth legacy IT multiple.
| Timeline | Event & Metric To Watch |
|---|---|
Late July 2026 | FY26 Q2 Earnings Call Watch: Software Revenue Growth (Constant Currency) must re-accelerate from Q1's 8% rate and move towards the 10%+ full-year guidance to restore confidence in the turnaround thesis. |
August 2026 | EU AI Act GPAI Rules Enforcement Watch: Company disclosures regarding material financial provisions for compliance costs or delays in European AI deployments on the watsonx platform, signaling regulatory headwinds. |
July - October 2026 | Competitor Earnings (Microsoft, AWS, Google) Watch: Announcements of major enterprise customer wins for Azure Arc or Google Anthos for hybrid cloud orchestration, specifically displacing a Red Hat-centric strategy. |
Late October 2026 | FY26 Q3 Earnings Call Watch: Consulting segment gross margin. Watch for compression combined with management commentary on 'wage pressure' to confirm the talent inflation thesis is hitting profitability. |
| Date | Event | Stock Impact |
|---|---|---|
Oct 22, 2025 | Q3 2025 Earnings Release Details: IBM exceeded revenue and profit expectations, raising its full-year outlook for revenue growth. The AI book of business was reported at over $9.5 billion. [12, 17] | Slight -0.87% pullback $284.31 -> $281.83 |
Dec 1, 2025 | Partnership with Anthropic Details: IBM announced a partnership with AI safety and research company Anthropic, broadening the foundation models available on its watsonx AI platform and bolstering its competitive offering against hyperscalers. | Slight -0.94% pullback $306.83 -> $303.94 |
Jan 8, 2026 | Investor Day 2025 Summary Release Details: Company outlined long-term segment mix targets, projecting the high-margin Software business to reach 50% of revenue by FY2027, reinforcing the profit pivot narrative. | Rose significantly by +2.02% $295.05 -> $301.00 |
Jan 15, 2026 | US-China Tech Export Policy Shift Details: The U.S. Department of Commerce revised its policy on advanced computing chip exports to China, creating a more unpredictable, but potentially more open, operating environment for IBM's hardware sales. | Rose significantly by +2.59% $296.26 -> $303.94 |
Jan 28, 2026 | Q4 2025 Earnings Release Details: IBM reported EPS of $4.52, beating the $4.31 estimate. The report highlighted a 9% expansion in the software segment, fueling optimism for the 2026 hybrid cloud strategy. [2, 3] | Surged +5.13% $292.49 -> $307.49 |
Apr 22, 2026 | Q1 2026 Earnings Release Details: Beat revenue and EPS estimates. However, stock fell on decelerating Software segment growth of 8% (constant currency) and management's reaffirmation, not raising, of full-year guidance. | Plummeted ~8% |
Position Sizing
1% - 3%
CONSERVATIVE
Stock is in an Explosive Volatility regime (3.1x S&P) with Spiking near-term uncertainty. The Contested Moat, Value Trap valuation, and Neutral sentiment warrant a Conservative sizing to manage risk.
Diversification Alternatives
MSFT
SECTORStronger moat with Azure as the #2 cloud player. Better growth visibility driven by enterprise-wide AI integration and a vast, locked-in software ecosystem.
ORCL
SECTORSuperior profitability metrics and a deeply entrenched database ecosystem creating high switching costs. A clearer, albeit smaller, growth vector in its accelerating cloud infrastructure business (OCI).
IBM is transitioning from a legacy IT services provider to a platform-centric hybrid cloud and AI company, where high-margin software growth from Red Hat and watsonx is increasingly driving profitability.
Filter all news through the lens of the software and AI-driven transformation thesis.
Software revenue growth accelerating above the full-year target of 10%+; Red Hat OpenShift adoption metrics (e.g., ARR >$2B); major watsonx enterprise customer wins by name; Consulting backlog growth driven by AI-related projects (currently ~30% of backlog).
Sustained weakness in Consulting revenue (low-single-digit growth) signaling macro pressure or AI cannibalization; Red Hat growth decelerating sequentially; evidence that hyperscalers (AWS, Azure, GCP) are displacing IBM's AI and hybrid cloud offerings in large enterprises.
Quarterly fluctuations in Infrastructure (mainframe) revenue, which is highly cyclical around product launches (e.g., z17); legacy portfolio revenue declines; minor bolt-on acquisitions outside of the core software strategy.
Repricing Catalyst
The market is re-rating IBM based on the success of its AI platform, watsonx, and the continued strong performance of Red Hat, which are shifting the revenue mix towards higher-margin, recurring software revenue. The key catalyst is sustained double-digit growth in the Software segment, with an FY2026 target of 10%+, and AI-related software revenue exceeding $1.5 billion, signaling successful monetization of the AI strategy.
Software (Hybrid Cloud & AI Platforms)
$28.4B TTM (45% of Total) · 82% MarginWhat It Is
Red Hat (OpenShift, Enterprise Linux), watsonx AI development platform, Data & AI (Confluent, DataStax), Automation (Apptio), and Transaction Processing software for mainframes.
Who Pays & How
Enterprises like Visa and Nestlé pay for software platforms to build and manage applications across their own data centers and public clouds (hybrid cloud). The high switching cost is due to deep integration with mission-critical systems and application development workflows.
Competition
Consulting (Business & Tech Services)
$21.2B TTM (33% of Total) · 28% MarginWhat It Is
Strategy, process, and technology consulting for large-scale business transformations, including AI implementation, application modernization, and cloud architecture.
Who Pays & How
Large enterprises pay project-based fees for expertise in implementing complex technology solutions and integrating IBM's (and partners') software and hardware.
Competition
Infrastructure (Mainframes & Servers)
$13.2B TTM (21% of Total) · 60% MarginWhat It Is
IBM Z-series mainframes (e.g., z17), Power servers, and enterprise storage solutions. Also includes infrastructure support services.
Who Pays & How
Financial services, governments, and other large institutions pay for mainframes to process high-volume, mission-critical transactions with high security and reliability. Lock-in is extremely high due to legacy codebases and core business process dependency.
Competition
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 |
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