International Business Machines (IBM) AI Stock Analysis

• Market Cap: $220.12B
• Dividend Yield: 2.84%
• Average Volume (3M): 5.00M
• Price to Earnings (P/E): 38.3
• Beta (1Y): 0.58
• Revenue Growth: 2.69%
• EPS Growth: -31.73%
• Country: US
• Employees: 270,300
• Sector: Technology
• Sector Strength: 96
• Industry: Information Technology Services
• EPS (TTM): 2.80
• Shares Outstanding: 931,519,200
• 10 Day Avg. Volume: 5,783,595
• 30 Day Avg. Volume: 5,003,644
• 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: 1.51
• Enterprise Value/Revenue: 5.18
• Enterprise Value/Gross Profit: 9.00
• Enterprise Value/Ebitda: 25.71
• 1Y Price Target: $296.15
• Price Target Upside: 25.33% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 13

• Rating: 67 Neutral
• Price Target: $282.00 ▲(19.34% Upside)

IBM's overall stock score is driven by strong financial performance and a positive outlook from the latest earnings call. However, technical analysis indicates bearish momentum, and the high P/E ratio raises valuation concerns. The company's strategic focus on AI and hybrid cloud is promising, yet investors should remain cautious about technical indicators and leverage levels.

Positive Factors

Free Cash Flow

IBM's shift towards higher margin Software is driving strong growth in free cash flow.

Generative AI Backlog

IBM's Generative AI backlog increased by about $1.5 billion, indicating strong demand and future growth potential.

Mainframe Performance

The z17 launch exceeded expectations, significantly boosting infrastructure revenue and segment operating profit.

Negative Factors

Consulting Challenges

Consulting growth is under pressure with weak discretionary spend and AI reducing the need for traditional projects.

Macro Environment Impact

The macro environment may cause volatility by pausing additional software implementation on the mainframe.

Software Revenue

Organic software revenues declined due to weaker transaction processing and integration distractions in Automation.

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 shows strong financial health with stable revenue growth and efficient cash flow generation. Despite high leverage, the company maintains a robust return on equity. Profit margins are solid, though recent pressure on net income needs monitoring. Overall, IBM is well-positioned financially, but should be cautious of its debt levels in fluctuating market environments.

Income Statement

IBM demonstrated a stable revenue growth with a 2.04% increase in TTM compared to 2024. The gross profit margin stands at a solid 57.56% for the TTM, although the net profit margin is moderate at 9.11%. EBIT and EBITDA margins are healthy at 14.56% and 16.33% respectively, indicating strong operational efficiency. However, the decrease in net income and EBIT from 2024 reflects some pressure on profitability.

Balance Sheet

IBM maintains a high debt-to-equity ratio of 2.46, suggesting significant leverage. However, its return on equity (ROE) is strong at 21.20% in the TTM, showing effective use of equity. The equity ratio is relatively low at 18.52%, indicating a reliance on debt financing which poses a risk if market conditions change.

Cash Flow

IBM's cash flow health is impressive with free cash flow to net income ratio at 2.13, showing efficient cash conversion. The operating cash flow to net income ratio is also strong at 2.28, reflecting robust cash generation relative to profits. Free cash flow growth is positive, enhancing IBM's capability to invest in growth or reduce debt.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	64.04B	62.75B	61.86B	60.53B	57.35B	55.18B
Gross Profit	36.87B	35.55B	34.30B	32.69B	31.49B	30.86B
EBITDA	12.90B	12.18B	14.69B	7.17B	12.41B	10.55B
Net Income	5.83B	6.02B	7.50B	1.64B	5.74B	5.59B
Balance Sheet
Total Assets	148.59B	137.18B	135.24B	127.24B	132.00B	155.97B
Cash, Cash Equivalents and Short-Term Investments	15.45B	14.59B	13.44B	8.74B	7.25B	13.81B
Total Debt	67.72B	58.40B	59.94B	54.01B	55.14B	65.09B
Total Liabilities	121.00B	109.78B	112.63B	105.22B	113.00B	135.25B
Stockholders Equity	27.51B	27.31B	22.53B	21.94B	18.90B	20.60B
Cash Flow
Free Cash Flow	11.81B	11.76B	12.12B	8.46B	10.03B	14.97B
Operating Cash Flow	13.28B	13.45B	13.93B	10.44B	12.80B	18.20B
Investing Cash Flow	-14.25B	-4.94B	-7.07B	-4.20B	-5.97B	-3.03B
Financing Cash Flow	-1.85B	-7.08B	-1.77B	-4.96B	-13.35B	-9.72B

International Business Machines Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 236.30
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Positive
• STOCH: Positive

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 236.3 is below the 20-day moving average (MA) of 259.80, below the 50-day MA of 272.36, and below the 200-day MA of 243.35, indicating a bearish trend. The MACD of -10.25 indicates Positive momentum. The RSI at 20.14 is Positive, neither overbought nor oversold. The STOCH value of 4.57 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for IBM.

International Business Machines Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
INFY	75 Outperform	$67.67B	20.67	30.46%	3.18%	4.52%	-0.22%
CTSH	74 Outperform	$33.77B	14.04	16.69%	1.76%	6.34%	12.16%
WIT	71 Outperform	$28.88B	19.95	16.50%	3.12%	-1.95%	62.75%
ACN	70 Outperform	$148.62B	18.99	27.27%	2.49%	6.21%	14.87%
Sector *	68 Neutral	¥241.23B	15.39	6.62%	2.45%	9.02%	-0.57%
IBM	67 Neutral	$220.12B	38.33	22.73%	2.84%	2.69%	-31.73%
FIS	58 Neutral	$36.50B	261.59	1.01%	2.12%	3.64%	102.21%

International Business Machines Corporate Events

IBM Exceeds Q2 2025 Expectations with Strong Growth

IBM reported strong financial results for the second quarter of 2025, with revenue, profit, and cash flow exceeding expectations. The company’s performance was driven by growth in its Software and Infrastructure segments, particularly with the introduction of the z17 mainframe and advancements in AI and hybrid cloud solutions. IBM’s strategic focus on AI and hybrid cloud continues to yield positive outcomes, as evidenced by significant growth in its GenAI business and recognition as an Emerging Leader in AI consulting. The company also expanded its partner ecosystem and launched new capabilities in its watsonx portfolio, further solidifying its position in the technology industry.

The most recent analyst rating on (IBM) stock is a Buy with a $250.00 price target. To see the full list of analyst forecasts on International Business Machines stock, see the IBM Stock Forecast page.

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.