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International Business Machines
(NYSE:IBM)
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Rating:65Neutral
Price Target:
$245.00
â–²(14.38% Upside)
Action:Reiterated
Date:07/23/26
The score is driven primarily by solid underlying financial performance—especially strong free cash flow generation and healthy profitability—partly offset by high leverage. Technical indicators are materially bearish and weigh on the score. Valuation and income support (mid-teens P/E and ~3.3% yield) help, while the latest earnings call suggests durable software/ARR strengths but highlights a near-term execution/guidance reset tied to delayed deal closures and infrastructure softness.
Positive Factors
Cash generation and conversion
Consistently high operating and free cash flow with ~94% conversion demonstrates durable internal funding for R&D, buybacks, dividends and debt service. Strong cash conversion reduces dependence on external financing and supports long-term strategic investments and shareholder returns.
Negative Factors
High leverage limits flexibility
Elevated debt relative to equity increases sensitivity to interest rates and reduces strategic optionality. High leverage constrains capital allocation during downturns, raises refinancing risk and can force prioritization of debt service over growth investments or aggressive share repurchases.
Read all positive and negative factors
Positive Factors
Negative Factors
Cash generation and conversion
Consistently high operating and free cash flow with ~94% conversion demonstrates durable internal funding for R&D, buybacks, dividends and debt service. Strong cash conversion reduces dependence on external financing and supports long-term strategic investments and shareholder returns.
Read all positive factors
International Business Machines Key Performance Indicators (KPIs)
Any
Gross Profit by Segment
Reveals profitability across IBM’s different business units, indicating which areas drive the most value and where margins might be under pressure.
Reveals profitability across IBM’s different business units, indicating which areas drive the most value and where margins might be under pressure.
Data provided by:
The Fly
The FlyInternational Business Machines (IBM) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$210.71B
Dividend Yield3.01%
Average Volume (3M)11.84M
Price to Earnings (P/E)19.5
Beta (1Y)0.90
Revenue Growth7.90%
EPS Growth82.11%
CountryUS
Employees286,800
SectorTechnology
Sector Strength88
IndustryInformation Technology Services
Share Statistics
EPS (TTM)11.45
Shares Outstanding942,134,400
10 Day Avg. Volume19,967,763
30 Day Avg. Volume11,844,304
Financial Highlights & Ratios
PEG Ratio0.35
Price to Book (P/B)8.46
Price to Sales (P/S)4.09
P/FCF Ratio23.86
Enterprise Value/Market Cap<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda<0.01
Forecast
1Y Price Target
$255.78Price Target Upside19.42% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering18
EPS Forecast (FY)12.31
Revenue Forecast (FY)$70.46B
International Business Machines Business Overview & Revenue Model
Company Description
International Business Machines Corporation (IBM) delivers comprehensive technology solutions and services across the globe. The company's operations are structured into four primary segments: Software, Consulting, Infrastructure, and Financing. T...
How the Company Makes Money
IBM makes money primarily by selling enterprise software subscriptions, delivering consulting services, and providing infrastructure systems along with ongoing support and maintenance. A significant portion of revenue comes from Software, where IB...
International Business Machines Earnings Call Summary
Earnings Call Date:Jul 22, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Oct 21, 2026
Earnings Call Sentiment Neutral
The call balanced clear operational strengths (recurring software ARR up 8%, record Distributed Infrastructure growth, z17 program strength, Consulting AI momentum, early traction for new products like Lightwell, and a strong quantum commitment) against a meaningful near‑term execution miss driven by CapEx‑timing shifts that delayed large deals. Management framed the quarter as a timing/deferral issue, highlighted that roughly one‑third of slipped deals closed early in Q3, reiterated free cash flow and margin improvement targets, and outlined productivity and go‑to‑market actions to recover growth. Given the mix of durable long‑term positives and a notable but described‑as‑transitory shortfall, the call conveys cautious confidence rather than outright optimism or alarm.Positive Updates
Recurring Software Strength and ARR Growth
Software revenue grew 5% (flat organic); ~80% of software revenue is recurring. ARR was $24.6 billion, up 8% year-over-year, with strong subscription/consumption performance in Red Hat, HashiCorp and Confluent.
Negative Updates
Quarterly Revenue Shortfall and Guidance Reduction
Second quarter revenue growth was 1%, short of expectations; company lowered full‑year revenue guidance to 4%–5% (from prior >5%), attributing the miss mainly to delayed large CapEx deals.
Read all updates
Q2-2026 Updates
Positive
Negative
Recurring Software Strength and ARR Growth
Software revenue grew 5% (flat organic); ~80% of software revenue is recurring. ARR was $24.6 billion, up 8% year-over-year, with strong subscription/consumption performance in Red Hat, HashiCorp and Confluent.
Read all positive updates
Company Guidance
IBM raised its full‑year revenue growth guide to 4%–5% (down from prior 5%+ talk), with software growth revised to 6%–8%, Infrastructure now expected to grow low single digits, and Consulting to accelerate to low‑to‑mid single digits; the company still expects to grow free cash flow by about $1.0B for 2026 and to deliver 100 basis points of operating pretax margin expansion, with an annual operating tax rate in the mid‑teens. Key quarter and portfolio metrics cited alongside the guide include Q2 revenue up 1%, Q2 software revenue +5% (flat organic), transaction processing down ~9% while data grew 18% and automation 3%, Infrastructure down 7%, z17 program‑to‑program ~130%, Distributed Infrastructure +37% with ~$500M backlog, ARR $24.6B (+8% y/y), nearly 80% of software revenue recurring, first‑half free cash flow $4.8B (cash $8.2B; debt $62B), and a Q3 outlook of constant‑currency revenue growth in line with the full year but with a ~1.5‑point currency headwind and an operating tax rate in the mid‑teens.International Business Machines Financial Statement Overview
Summary
Income Statement
78
Positive
Balance Sheet
60
Neutral
Cash Flow
82
Very Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 69.10B | 67.54B | 62.75B | 61.86B | 60.53B | 57.35B |
| Gross Profit | 40.38B | 39.30B | 35.55B | 34.30B | 32.69B | 31.49B |
| EBITDA | 16.22B | 17.28B | 12.18B | 14.69B | 7.17B | 12.41B |
| Net Income | 10.72B | 10.59B | 6.02B | 7.50B | 1.64B | 5.74B |
Balance Sheet | ||||||
| Total Assets | 152.10B | 151.88B | 137.18B | 135.24B | 127.24B | 132.00B |
| Cash, Cash Equivalents and Short-Term Investments | 8.13B | 14.47B | 14.59B | 13.44B | 8.74B | 7.25B |
| Total Debt | 65.27B | 67.15B | 58.40B | 59.94B | 54.01B | 55.14B |
| Total Liabilities | 117.56B | 119.14B | 109.78B | 112.63B | 105.22B | 113.00B |
| Stockholders Equity | 34.45B | 32.65B | 27.31B | 22.53B | 21.94B | 18.90B |
Cash Flow | ||||||
| Free Cash Flow | 14.58B | 11.57B | 11.76B | 12.12B | 8.46B | 10.03B |
| Operating Cash Flow | 14.89B | 13.19B | 13.45B | 13.93B | 10.44B | 12.80B |
| Investing Cash Flow | -9.99B | -10.30B | -4.94B | -7.07B | -4.20B | -5.97B |
| Financing Cash Flow | -9.43B | -3.83B | -7.08B | -1.77B | -4.96B | -13.35B |
International Business Machines Risk Analysis
International Business Machines disclosed 25 risk factors in its most recent earnings report. International Business Machines reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
International Business Machines Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $101.53B | 13.15 | 25.00% | 4.44% | 6.74% | -0.66% | |
76 Outperform | $24.93B | 11.88 | 14.94% | 2.82% | 5.64% | -5.39% | |
75 Outperform | $48.17B | 14.45 | 33.03% | 4.71% | -0.64% | 5.69% | |
65 Neutral | $210.71B | 19.53 | 33.52% | 3.14% | 7.90% | 82.11% | |
65 Neutral | $19.08B | 14.54 | 15.58% | 1.11% | -0.12% | -7.87% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% |
* Technology Sector Average
IBM
International Business Machines
235.15
-9.27
-3.79%
ACN
Accenture
170.43
-68.69
-28.73%
CTSH
Cognizant
56.13
-12.32
-18.00%
INFY
Infosys
12.60
-3.11
-19.78%
WIT
Wipro
2.05
-0.54
-20.94%
International Business Machines Corporate Events
Business Operations and StrategyFinancial Disclosures
IBM launches Lightwell AI initiative amid mixed quarter
Negative
Jul 15, 2026
IBM reported preliminary second-quarter 2026 results with revenue rising modestly to $17.2 billion, driven by software growth and stable consulting, but offset by a 7 percent decline in infrastructure revenue and softer gross margins. Management c...
Business Operations and StrategyPrivate Placements and Financing
IBM Extends Syndicated Credit Facilities, Enhancing Liquidity
Positive
Jun 23, 2026
On June 22, 2026, IBM extended the maturities of its existing $2.5 billion three-year and $7.5 billion five-year syndicated credit agreements with a consortium of global banks, including JPMorgan Chase, BNP Paribas, Citibank and Royal Bank of Cana...
Business Operations and Strategy
IBM Announces Major Investment to Expand Quantum Computing Leadership
Positive
May 28, 2026
IBM told investors on May 28, 2026, that it plans to invest more than $10 billion over the next five years to expand its quantum computing leadership, funding research and development, capital expenditures, ecosystem partnerships, manufacturing sc...
Business Operations and StrategyShareholder Meetings
IBM Shareholders Endorse Board, Pay and Incentive Plan
Positive
May 1, 2026
IBM shareholders met on April 28, 2026, and re-elected all nominees to the board of directors for one-year terms, with most directors receiving strong majority support, though veteran director Andrew N. Liveris drew a comparatively higher level of...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.