International Business Machines (IBM) AI Stock Analysis

• Market Cap: $289.06B
• Dividend Yield: 2.17%
• Average Volume (3M): 3.94M
• Price to Earnings (P/E): 37.0
• Beta (1Y): 0.66
• 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: 3,237,464
• 30 Day Avg. Volume: 3,942,964
• 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: 1.11
• Enterprise Value/Revenue: 4.89
• Enterprise Value/Gross Profit: 8.40
• Enterprise Value/Ebitda: 19.71
• 1Y Price Target: $303.71
• Price Target Upside: -1.79% Downside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 16
• EPS Forecast (FY): 11.37
• Revenue Forecast (FY): $67.07B

• Rating: 79 Outperform
• Price Target: $354.00 ▲(14.47% Upside)

IBM's overall stock score of 79 reflects its strong financial performance and positive earnings call sentiment, which highlight robust revenue growth and strategic focus on AI and hybrid cloud. The technical analysis supports a positive trend, although caution is advised due to valuation concerns and potential overbought conditions. The company's ability to generate cash flow and maintain profitability mitigates some risks associated with high leverage.

Positive Factors

Revenue Growth

IBM's significant revenue growth indicates strong market demand and effective business strategies, particularly in AI and hybrid cloud, supporting long-term expansion.

Free Cash Flow

Robust free cash flow generation enhances IBM's financial flexibility, enabling strategic investments and debt management, supporting sustainable growth.

Strategic Acquisition

The acquisition of Confluent is expected to drive product synergies and accelerate revenue growth, enhancing IBM's competitive position in AI and data streaming.

Negative Factors

High Leverage

High leverage poses risks to IBM's financial stability, potentially limiting its ability to invest in growth opportunities or weather economic downturns.

Red Hat Growth Challenges

Challenges in Red Hat growth could hinder IBM's expansion in cloud services, affecting its ability to capitalize on the growing demand for cloud solutions.

Decline in Transaction Processing Revenue

A decline in transaction processing revenue indicates potential vulnerabilities in IBM's hardware segment, which could impact overall revenue stability.

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 generates revenue through multiple streams, primarily consisting of cloud services, software, and consulting services. The company's cloud computing segment, which includes IBM Cloud and Red Hat, has become a significant source of revenue as businesses increasingly shift to cloud-based solutions. Additionally, IBM's software offerings, particularly in analytics, security, and AI, contribute a substantial portion of its earnings. Consulting services, which encompass IT strategy, implementation, and managed services, also play a crucial role in IBM's revenue model. The company has formed strategic partnerships with organizations such as Salesforce and SAP to enhance its service offerings and expand its market reach. Moreover, IBM invests in research and development to drive innovation, which further strengthens its competitive edge and revenue potential.

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: 309.24
• 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 309.24 is above the 20-day moving average (MA) of 303.39, above the 50-day MA of 298.31, and above the 200-day MA of 266.12, indicating a bullish trend. The MACD of 3.61 indicates Negative momentum. The RSI at 56.81 is Neutral, neither overbought nor oversold. The STOCH value of 72.86 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	80 Outperform	$168.40B	22.35	25.82%	2.24%	7.36%	6.18%
IBM	79 Outperform	$289.06B	36.99	30.25%	2.17%	4.51%	21.89%
CTSH	79 Outperform	$40.51B	19.46	14.50%	1.48%	7.44%	-4.57%
INFY	76 Outperform	$73.41B	22.53	29.15%	2.69%	4.62%	1.06%
WIT	74 Outperform	$30.17B	18.52	16.39%	2.97%	-1.97%	48.61%
FI	68 Neutral	―	―	13.64%	―	5.16%	24.92%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%

International Business Machines Corporate Events

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.