International Business Machines (IBM)
NYSE:IBM
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International Business Machines
(NYSE:IBM)
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Rating:70Outperform
Price Target:
$254.00
â–²(10.07% Upside)
Action:ReiteratedDate:01/29/26
IBM scores well on operating execution and forward outlook (strong 2026 guidance, software/ARR momentum, and higher expected free cash flow), supported by solid profitability and cash generation. The score is held back by elevated leverage, a high P/E valuation, and currently weak-to-neutral technical momentum (negative MACD and trading below key short-term moving averages).
Positive Factors
Software & ARR Momentum
A large, growing software mix with ARR of ~$23.6B supports durable, recurring revenue and predictable cash flow. Sustained software acceleration (Q4 11%) enhances operating leverage and margin sustainability, underpinning multi-year shift to higher‑margin hybrid cloud and AI offerings.
Negative Factors
Elevated Leverage
High absolute debt and a ~2.39 debt-to-equity ratio raise financial risk and limit strategic flexibility. Even with solid cash flow, leverage amplifies downturn sensitivity, increases interest burden, and slows ability to accelerate buybacks or M&A de‑risking, extending the timeline to materially reduce leverage.
Read all positive and negative factors
Positive Factors
Negative Factors
Software & ARR Momentum
A large, growing software mix with ARR of ~$23.6B supports durable, recurring revenue and predictable cash flow. Sustained software acceleration (Q4 11%) enhances operating leverage and margin sustainability, underpinning multi-year shift to higher‑margin hybrid cloud and AI offerings.
Read all positive factors
International Business Machines (IBM) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$222.48B
Dividend Yield2.21%
Average Volume (3M)5.16M
Price to Earnings (P/E)26.1
Beta (1Y)0.67
Revenue Growth4.51%
EPS Growth21.89%
CountryUS
Employees270,300
SectorTechnology
Sector Strength88
IndustryInformation Technology Services
Share Statistics
EPS (TTM)4.52
Shares Outstanding938,034,400
10 Day Avg. Volume3,515,281
30 Day Avg. Volume5,162,552
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 Cap1.21
Enterprise Value/Revenue4.00
Enterprise Value/Gross Profit6.80
Enterprise Value/Ebitda15.62
Forecast
1Y Price Target
$324.19Price Target Upside40.49% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering17
EPS Forecast (FY)12.39
Revenue Forecast (FY)$71.11B
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 pl...
How the Company Makes Money
IBM primarily makes money by selling enterprise software subscriptions and support, billing for consulting and delivery services, and generating revenue from infrastructure-related offerings. A major revenue stream is Software, which includes subs...
International Business Machines Key Performance Indicators (KPIs)
Any
Revenue by Segment
Breaks down IBM’s sales across its various divisions, showcasing which segments are growing and contributing most to overall revenue.
Breaks down IBM’s sales across its various divisions, showcasing which segments are growing and contributing most to overall revenue.
Data provided by:
The Fly
The FlyInternational Business Machines Earnings Call Summary
Earnings Call Date:Jan 28, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 22, 2026
Earnings Call Sentiment Positive
The call highlights strong execution and momentum across IBM’s software-led transformation with multiple record metrics (notably revenue growth, software acceleration, margin expansion, and free cash flow). Significant progress in GenAI, IBM Z, ARR growth, productivity savings, and disciplined M&A amplify the positive outlook and underpin confident 2026 guidance. Notable near-term challenges include Red Hat deceleration, federal booking delays, product-cycle impacts in infrastructure, and expected short-term dilution from Confluent along with memory pricing/headwinds. Overall, the positive operating and financial momentum materially outweighs the manageable near-term headwinds.Positive Updates
Strong Full-Year Revenue and Cash Generation
Revenue grew 6% in 2025 (highest level in many years) and IBM generated $14.7 billion of free cash flow (highest in over a decade), representing 16% year-over-year free cash flow growth and the highest free cash flow margin in reported history.
Negative Updates
Red Hat Deceleration and Federal Deal Delay Impact
Red Hat growth decelerated to 8% in Q4 (partly due to wrap of last year's elevated consumption-based services and delays in U.S. federal bookings related to the government shutdown), with Red Hat Linux at mid-single-digit growth versus prior higher expectations.
Read all updates
Q4-2025 Updates
Positive
Negative
Strong Full-Year Revenue and Cash Generation
Revenue grew 6% in 2025 (highest level in many years) and IBM generated $14.7 billion of free cash flow (highest in over a decade), representing 16% year-over-year free cash flow growth and the highest free cash flow margin in reported history.
Read all positive updates
Company Guidance
IBM guided to sustain 5%+ constant‑currency revenue growth in 2026 with free cash flow up about $1.0 billion to roughly $15.7 billion, driven primarily by high‑single‑digit adjusted EBITDA growth; they expect software to accelerate to ~10% growth (ARR about $23.6B, organic >7%), consulting to grow low‑ to mid‑single digits (backlog ~$32B, GenAI backlog penetration >25%, consulting GenAI book >$2B this quarter), and infrastructure to be down low‑single digits (≈‑0.5 point impact to IBM) despite continued Z momentum. Management expects operating pretax margin expansion of ~100 basis points for the year (Q1 ~100 bps), an operating tax rate in the mid‑teens, and noted ~ $600M of 2026 dilution from the announced Confluent deal (Confluent accretive to adjusted EBITDA in year one and to free cash flow in year two, with ~$500M run‑rate operational synergies by 2027). They also cited productivity targets—exiting 2025 at $4.5B annual run‑rate savings and targeting $5.5B by 2026 (including an incremental $1B this year)—and reaffirmed near‑term cadence: Q1 revenue growth similar to the full year and continued margin/profitability tailwinds.International Business Machines Financial Statement Overview
Summary
Income Statement
78
Positive
Balance Sheet
60
Neutral
Cash Flow
74
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 67.53B | 62.75B | 61.86B | 60.53B | 57.35B |
| Gross Profit | 40.19B | 35.55B | 34.30B | 32.69B | 31.49B |
| EBITDA | 17.28B | 12.18B | 14.69B | 7.17B | 12.41B |
| Net Income | 10.59B | 6.02B | 7.50B | 1.64B | 5.74B |
Balance Sheet | |||||
| Total Assets | 151.88B | 137.18B | 135.24B | 127.24B | 132.00B |
| Cash, Cash Equivalents and Short-Term Investments | 14.47B | 14.59B | 13.44B | 8.74B | 7.25B |
| Total Debt | 67.15B | 58.40B | 59.94B | 54.01B | 55.14B |
| Total Liabilities | 119.14B | 109.78B | 112.63B | 105.22B | 113.00B |
| Stockholders Equity | 32.65B | 27.31B | 22.53B | 21.94B | 18.90B |
Cash Flow | |||||
| Free Cash Flow | 11.57B | 11.76B | 12.12B | 8.46B | 10.03B |
| Operating Cash Flow | 13.19B | 13.45B | 13.93B | 10.44B | 12.80B |
| Investing Cash Flow | -10.30B | -4.94B | -7.07B | -4.20B | -5.97B |
| Financing Cash Flow | -3.83B | -7.08B | -1.77B | -4.96B | -13.35B |
International Business Machines Technical Analysis
Negative
230.76
Price Trends
256.07
Negative
278.04
Negative
274.16
Negative
Market Momentum
-4.63
Positive
35.44
Neutral
23.85
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For IBM, the sentiment is Negative. The current price of 230.76 is below the 20-day moving average (MA) of 243.81, below the 50-day MA of 256.07, and below the 200-day MA of 274.16, indicating a bearish trend. The MACD of -4.63 indicates Positive momentum. The RSI at 35.44 is Neutral, neither overbought nor oversold. The STOCH value of 23.85 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for IBM.
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 |
|---|---|---|---|---|---|---|---|
74 Outperform | $114.21B | 17.31 | 24.82% | 2.25% | 6.58% | 1.19% | |
73 Outperform | $58.00B | 24.55 | 29.68% | 2.58% | 4.62% | 1.06% | |
70 Outperform | $222.48B | 26.07 | 36.86% | 2.21% | 4.51% | 21.89% | |
68 Neutral | $27.70B | 17.90 | 14.84% | 1.46% | 7.44% | -4.57% | |
67 Neutral | $23.05B | 21.25 | 15.49% | 2.78% | -1.97% | 48.61% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% |
* Technology Sector Average
IBM
International Business Machines
230.76
-2.50
-1.07%
ACN
Accenture
179.53
-102.90
-36.43%
CTSH
Cognizant
57.92
-11.65
-16.74%
INFY
Infosys
13.29
-3.30
-19.91%
WIT
Wipro
2.17
-0.57
-20.72%
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.