International Business Machines (IBM) AI Stock Analysis

• Market Cap: $284.84B
• Dividend Yield: 2.38%
• Average Volume (3M): 6.22M
• Price to Earnings (P/E): 36.4
• Beta (1Y): 0.64
• Revenue Growth: 4.51%
• EPS Growth: 21.89%
• Country: US
• Employees: 270,300
• Sector: Technology
• Sector Strength: 88
• Industry: Information Technology Services
• EPS (TTM): 2.65
• Shares Outstanding: 934,735,200
• 10 Day Avg. Volume: 8,412,126
• 30 Day Avg. Volume: 6,219,696
• PEG Ratio: -1.66
• Price to Book (P/B): 7.54
• Price to Sales (P/S): 3.28
• P/FCF Ratio: 17.52
• Enterprise Value/Market Cap: 1.12
• Enterprise Value/Revenue: 4.89
• Enterprise Value/Gross Profit: 8.40
• Enterprise Value/Ebitda: 19.71
• 1Y Price Target: $295.18
• Price Target Upside: -3.98% Downside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 14

• Rating: 77 Outperform
• Price Target: $349.00 ▲(13.53% Upside)

IBM's overall stock score reflects its strong financial performance and positive earnings call, which highlight robust revenue growth and strategic focus on AI and hybrid cloud. The technical analysis indicates bullish momentum, although the high P/E ratio suggests potential overvaluation. The company's ability to generate cash and maintain profitability supports a positive outlook, despite high leverage.

Positive Factors

Revenue Growth

IBM's significant revenue growth across all segments highlights its strong market position and effective business strategy, particularly in AI and hybrid cloud, which are expected to drive sustained performance.

Cash Flow Generation

Robust free cash flow generation underscores IBM's financial health and operational efficiency, providing the company with the flexibility to invest in growth initiatives and manage debt.

AI and Automation

Strong performance in AI and automation reflects IBM's strategic focus on high-growth areas, positioning it well to capitalize on industry trends and drive long-term growth.

Negative Factors

High Leverage

High leverage poses potential risks to IBM's financial stability, as it may limit the company's ability to invest in new opportunities and manage economic downturns effectively.

Decline in Transaction Processing

The decline in transaction processing revenue indicates potential vulnerability in IBM's revenue streams, which could affect overall growth if not addressed strategically.

Challenges in Red Hat Growth

Challenges in Red Hat growth suggest potential headwinds in IBM's cloud strategy, which could hinder its ability to fully leverage its acquisition and maintain competitive advantage.

International Business Machines Business Overview & Revenue Model

Company Description

International Business Machines (IBM) is a multinational technology and consulting company, known for its innovation in hardware, software, and services. Founded in 1911, IBM operates in various sectors, including cloud computing, artificial intelligence, data analytics, and enterprise solutions. Its core products and services include IBM Cloud, IBM Watson, and IBM Systems, as well as a suite of consulting and IT services that help organizations transform their operations and leverage technology for competitive advantage.

How the Company Makes Money

IBM generates revenue through multiple streams, primarily from its cloud and cognitive software, global business services, and systems segments. The company earns a significant portion of its revenue from cloud computing services, which include infrastructure-as-a-service (IaaS) and platform-as-a-service (PaaS) offerings. Additionally, IBM's consulting services, which encompass business process services and technology consulting, contribute notably to its earnings. The company has established strategic partnerships with various organizations to enhance its product offerings and expand market reach, particularly in industries like healthcare, finance, and government. Moreover, IBM generates income through licensing its software products and providing maintenance and support services. Overall, the combination of these revenue streams, along with ongoing investments in research and development, positions IBM to adapt to market demands and capitalize on emerging technologies.

International Business Machines Financial Statement Overview

Summary

IBM demonstrates strong financial health with robust profitability and cash generation capabilities. The company has maintained steady revenue growth and efficient operations, as reflected in its margins. While the balance sheet shows high leverage, IBM's ability to generate returns on equity and cash flow mitigates some of the associated risks.

Income Statement

IBM's income statement shows strong profitability with a gross profit margin of 58.16% and a net profit margin of 12.09% for the TTM (Trailing-Twelve-Months). The company has demonstrated consistent revenue growth, with a 2.13% increase in the latest period. EBIT and EBITDA margins are healthy at 17.39% and 24.79%, respectively, indicating efficient operations. The company has maintained a positive revenue growth trajectory over the years, reflecting robust business performance.

Balance Sheet

IBM's balance sheet reveals a high debt-to-equity ratio of 2.39, which suggests significant leverage. However, the return on equity is strong at 28.86%, indicating effective use of equity to generate profits. The equity ratio stands at 19.07%, reflecting a moderate level of equity financing. While the company is leveraging debt effectively, the high leverage poses potential risks if not managed carefully.

Cash Flow

The cash flow statement indicates a solid free cash flow growth rate of 10.42% in the TTM, showcasing IBM's ability to generate cash. The operating cash flow to net income ratio is 1.71, and the free cash flow to net income ratio is 0.97, both suggesting strong cash generation relative to net income. The company has shown resilience in maintaining positive cash flow growth, which supports its financial stability.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	65.40B	62.75B	61.86B	60.53B	57.35B	55.18B
Gross Profit	38.04B	35.55B	34.30B	32.69B	31.49B	30.86B
EBITDA	16.21B	12.18B	14.69B	7.17B	12.41B	10.55B
Net Income	7.91B	6.02B	7.50B	1.64B	5.74B	5.59B
Balance Sheet
Total Assets	146.31B	137.18B	135.24B	127.24B	132.00B	155.97B
Cash, Cash Equivalents and Short-Term Investments	14.86B	14.59B	13.44B	8.74B	7.25B	13.81B
Total Debt	66.57B	58.40B	59.94B	54.01B	55.14B	65.09B
Total Liabilities	118.32B	109.78B	112.63B	105.22B	113.00B	135.25B
Stockholders Equity	27.91B	27.31B	22.53B	21.94B	18.90B	20.60B
Cash Flow
Free Cash Flow	13.04B	11.76B	12.12B	8.46B	10.03B	14.97B
Operating Cash Flow	13.48B	13.45B	13.93B	10.44B	12.80B	18.20B
Investing Cash Flow	-13.10B	-4.94B	-7.07B	-4.20B	-5.97B	-3.03B
Financing Cash Flow	-2.10B	-7.08B	-1.77B	-4.96B	-13.35B	-9.72B

International Business Machines Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 307.41
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For IBM, the sentiment is Positive. The current price of 307.41 is above the 20-day moving average (MA) of 292.12, above the 50-day MA of 274.33, and above the 200-day MA of 258.99, indicating a bullish trend. The MACD of 9.51 indicates Negative momentum. The RSI at 63.42 is Neutral, neither overbought nor oversold. The STOCH value of 78.58 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for IBM.

International Business Machines Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ACN	―	$154.07B	20.44	25.82%	2.44%	7.36%	6.18%
CTSH	―	$35.10B	16.86	14.50%	1.72%	7.44%	-4.57%
IBM	―	$284.84B	36.45	30.25%	2.38%	4.51%	21.89%
INFY	―	$69.53B	20.79	29.15%	3.17%	4.62%	1.06%
WIT	―	$28.37B	17.39	16.39%	3.14%	-1.97%	48.61%
FI	―	$35.04B	10.07	13.64%	―	5.16%	24.92%
Sector *	―	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%

International Business Machines Corporate Events

IBM’s Earnings Call Highlights Robust Growth in 2025

IBM’s recent earnings call painted a picture of robust financial health and strategic growth, underscored by a strong sentiment of optimism. The company reported significant revenue growth across all segments, driven by a strategic focus on AI and hybrid cloud technologies. Despite facing challenges in transaction processing and Red Hat growth, IBM showcased impressive free cash flow and consulting growth, signaling a positive trajectory for the future.

IBM Reports Strong Q3 2025 Financial Performance

In the third quarter of 2025, IBM reported strong financial performance with a 7% revenue growth, marking its highest growth in several years. The company’s strategy focused on hybrid cloud and AI, driving significant growth in software and infrastructure segments. IBM’s AI and automation offerings, such as watsonx and the z17 infrastructure, contributed to this success, with notable client engagements and productivity gains. The company also highlighted advancements in quantum computing and partnerships, raising expectations for revenue growth and free cash flow for the year.

The most recent analyst rating on (IBM) stock is a Hold with a $300.00 price target. To see the full list of analyst forecasts on International Business Machines stock, see the IBM Stock Forecast page.

IBM Reports Strong Q3 2025 Results, Raises Outlook

International Business Machines Corporation (IBM) is a global technology and consulting company, operating in the information technology sector, known for its extensive portfolio of software, consulting, and infrastructure services, as well as its pioneering work in artificial intelligence (AI).