International Business Machines (IBM) AI Stock Analysis

• Market Cap: $269.25B
• Dividend Yield: 2.32%
• Average Volume (3M): 3.58M
• Price to Earnings (P/E): 49.8
• Beta (1Y): 0.61
• Revenue Growth: 1.23%
• EPS Growth: -33.87%
• Country: US
• Employees: 270,300
• Sector: Technology
• Sector Strength: 88
• Industry: Information Technology Services
• EPS (TTM): 1.60
• Shares Outstanding: 929,396,550
• 10 Day Avg. Volume: 4,023,642
• 30 Day Avg. Volume: 3,582,179
• PEG Ratio: 1.09
• Price to Book (P/B): 5.45
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 9.16
• Enterprise Value/Market Cap: 0.64
• Enterprise Value/Revenue: 0.69
• Enterprise Value/Gross Profit: 4.84
• Enterprise Value/Ebitda: 3.31
• 1Y Price Target: $269.46
• Price Target Upside: -8.59% Downside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 14

• Rating: 75 Outperform
• Price Target: $316.00 ▲(7.20%Upside)

IBM's overall stock score is driven by strong financial performance and positive technical indicators, highlighting robust growth in software and AI. Valuation concerns due to a high P/E ratio and macroeconomic challenges in consulting and infrastructure present potential risks. Nonetheless, strategic initiatives and financial flexibility position IBM well for continued growth.

Positive Factors

Strategic M&A and portfolio rebalancing

IBM underwent a significant transformation by shifting their software segment towards strategic M&A investments, shedding lower growth/high-cost businesses, and rebalancing their portfolio towards cloud and AI trends.

Transformational initiatives

IBM remains interesting due to the transformational initiatives undertaken by management, positioning for growth in Gen AI, Agentic AI, and eventually quantum, and strong free cash flow driven by internal productivity initiatives.

Negative Factors

Historical performance concerns

Bears cling to IBM’s pre-2020 history as a value trap, with underperformance from 2010-2019 as revenues, margins and FCF were under pressure.

Structural under-ownership

Despite its recent rally, IBM remains structurally under-owned and underweight due to underperformance from 2010-2019, which bears highlight as a value trap.

International Business Machines Business Overview & Revenue Model

Company Description

International Business Machines Corporation provides integrated solutions and services worldwide. The company operates through four business segments: Software, Consulting, Infrastructure, and Financing. The Software segment offers hybrid cloud platform and software solutions, such as Red Hat, an enterprise open-source solutions; software for business automation, AIOps and management, integration, and application servers; data and artificial intelligence solutions; and security software and services for threat, data, and identity. This segment also provides transaction processing software that supports clients' mission-critical and on-premise workloads in banking, airlines, and retail industries. The Consulting segment offers business transformation services, including strategy, business process design and operations, data and analytics, and system integration services; technology consulting services; and application and cloud platform services. The Infrastructure segment provides on-premises and cloud-based server and storage solutions for its clients' mission-critical and regulated workloads; and support services and solutions for hybrid cloud infrastructure, as well as remanufacturing and remarketing services for used equipment. The Financing segment offers lease, installment payment, loan financing, and short-term working capital financing services. The company was formerly known as Computing-Tabulating-Recording Co. International Business Machines Corporation was incorporated in 1911 and is headquartered in Armonk, New York.

How the Company Makes Money

IBM makes money through several key revenue streams, primarily stemming from its hybrid cloud and AI solutions, software, and consulting services. The hybrid cloud and cognitive software segment, which includes IBM's cloud platform and data analytics, represents a significant portion of its revenue as businesses increasingly migrate to cloud environments. Additionally, IBM's consulting division offers digital transformation and technology consulting services, helping clients implement and manage complex IT systems. The company also generates income from its infrastructure segment, which includes the sale of server hardware and operating systems, as well as through its financing arm, offering leasing and loan services for its products. Strategic partnerships with other technology companies and continued investment in research and development further bolster IBM's revenue streams, enabling the company to innovate and maintain its competitive edge in the technology sector.

International Business Machines Financial Statement Overview

Summary

IBM demonstrates strong profitability with a TTM gross profit margin of 57.0% and a net profit margin of 8.7%. Revenue growth is steady at 1.7%, but EBIT margin has declined, indicating operational challenges. The high debt-to-equity ratio of 2.49 poses a financial risk, though cash flow metrics are robust with a healthy operating cash flow to net income ratio of 2.49.

Income Statement

IBM demonstrates solid profitability with a TTM gross profit margin of 57.0% and a net profit margin of 8.7%. Revenue growth has been steady, with a 1.7% increase from the previous year. However, EBIT margin has declined from 9.6% to 7.3%, indicating operational challenges.

Balance Sheet

IBM's balance sheet shows a high debt-to-equity ratio of 2.49, which could pose financial risk if not managed properly. However, the company maintains a reasonable equity ratio of 18.4%, and a return on equity of 20.4% is strong, indicating efficient use of equity capital.

Cash Flow

Cash flow metrics are robust, with a healthy operating cash flow to net income ratio of 2.49 and a free cash flow to net income ratio of 2.25. The free cash flow growth rate shows a 4.9% increase, indicating effective cash generation despite capital expenditures.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	62.83B	62.75B	61.86B	60.53B	57.35B	55.18B
Gross Profit	35.84B	35.55B	34.30B	32.69B	31.49B	30.86B
EBITDA	12.33B	12.18B	14.69B	7.17B	12.41B	10.55B
Net Income	5.47B	6.02B	7.50B	1.64B	5.74B	5.59B
Balance Sheet
Total Assets	145.67B	137.18B	135.24B	127.24B	132.00B	155.97B
Cash, Cash Equivalents and Short-Term Investments	17.46B	14.59B	13.44B	8.74B	7.25B	13.81B
Total Debt	66.83B	58.40B	59.94B	54.01B	55.14B	65.09B
Total Liabilities	118.71B	109.78B	112.63B	105.22B	113.00B	135.25B
Stockholders Equity	26.88B	27.31B	22.53B	21.94B	18.90B	20.60B
Cash Flow
Free Cash Flow	11.94B	11.76B	12.12B	8.46B	10.03B	14.97B
Operating Cash Flow	13.65B	13.45B	13.93B	10.44B	12.80B	18.20B
Investing Cash Flow	-13.71B	-4.94B	-7.07B	-4.20B	-5.97B	-3.03B
Financing Cash Flow	-3.51B	-7.08B	-1.77B	-4.96B	-13.35B	-9.72B

International Business Machines Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 294.78
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• 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 294.78 is above the 20-day moving average (MA) of 279.90, above the 50-day MA of 262.25, and above the 200-day MA of 237.32, indicating a bullish trend. The MACD of 8.80 indicates Negative momentum. The RSI at 72.11 is Negative, neither overbought nor oversold. The STOCH value of 79.28 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
INFY	81 Outperform	$78.03B	24.28	29.00%	2.78%	3.85%	-0.38%
ACN	77 Outperform	$201.01B	23.52	27.27%	2.00%	6.21%	14.87%
IBM	75 Outperform	$269.25B	49.83	21.91%	2.32%	1.23%	-33.87%
WIT	72 Outperform	$32.41B	20.46	16.62%	1.01%	-2.83%	106.18%
CTSH	71 Outperform	$38.32B	16.37	16.61%	1.59%	4.09%	14.05%
FIS	71 Outperform	$42.45B	50.54	5.25%	1.98%	-9.12%	―
Sector *	69 Neutral	¥231.71B	14.67	7.64%	2.71%	9.09%	8.52%

International Business Machines Corporate Events

IBM Amends Credit Agreements for Financial Flexibility

On June 20, 2025, IBM announced amendments to its existing credit agreements, extending the maturity of its $2.5 billion Three-Year Credit Agreement to June 20, 2028, and its $7.5 billion Five-Year Credit Agreement to June 22, 2030. These amendments, involving major financial institutions like JPMorgan Chase Bank, BNP Paribas, Citibank, and Royal Bank of Canada, are expected to provide IBM with enhanced financial flexibility and stability, potentially impacting its operational strategies and market positioning.

The most recent analyst rating on (IBM) stock is a Buy with a $200.00 price target. To see the full list of analyst forecasts on International Business Machines stock, see the IBM Stock Forecast page.

IBM Exceeds Q1 2025 Financial Expectations with Strong Growth

IBM reported strong financial performance for the first quarter of 2025, exceeding expectations with solid revenue growth, profitability, and cash flow generation. The company’s strategy around hybrid cloud and AI continues to drive success, with significant contributions from its software segment, particularly in automation and AI. IBM’s infrastructure segment also showed strong performance, and the company remains optimistic about its future growth prospects, maintaining its full-year guidance for revenue growth and free cash flow.