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International Business Machines
(NYSE:IBM)
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Rating:73Outperform
Price Target:
$281.00
▲(19.99% Upside)
Action:Reiterated
Date:10/23/26
IBM scores well on fundamental quality driven by strong profitability and dependable free cash flow, reinforced by a notably positive earnings call with raised free-cash-flow expectations. The score is moderated by balance-sheet leverage and near-term technical stretch signals (RSI/Stoch elevated) alongside a valuation that appears fair rather than clearly discounted.
Positive Factors
Recurring software growth
Strong software growth and expanding annual recurring revenue provide a durable, contract-based foundation for IBM’s earnings. The mix of net new business, subscriptions, and support can improve revenue visibility while funding continued investment in hybrid cloud and AI capabilities.
Negative Factors
High leverage
IBM’s sizable debt load reduces financial flexibility even though leverage has improved from earlier levels. Interest obligations and refinancing needs can absorb cash that might otherwise support investment or shareholder returns, while a growth slowdown would make balance-sheet repair more difficult.
Read all positive and negative factors
Positive Factors
Negative Factors
Recurring software growth
Strong software growth and expanding annual recurring revenue provide a durable, contract-based foundation for IBM’s earnings. The mix of net new business, subscriptions, and support can improve revenue visibility while funding continued investment in hybrid cloud and AI capabilities.
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
$239.64B
Dividend Yield2.66%
Average Volume (3M)6.03M
Price to Earnings (P/E)21.3
Beta (1Y)0.89
Revenue Growth6.83%
EPS Growth39.80%
CountryUS
Employees264,300
SectorTechnology
Sector Strength88
IndustryInformation Technology Services
Share Statistics
EPS (TTM)11.90
Shares Outstanding942,134,400
10 Day Avg. Volume6,013,203
30 Day Avg. Volume6,028,115
Financial Highlights & Ratios
PEG Ratio0.35
Price to Book (P/B)8.46
Price to Sales (P/S)4.09
P/FCF Ratio22.82
Enterprise Value/Market Cap1.11
Enterprise Value/Revenue3.81
Enterprise Value/Gross Profit6.58
Enterprise Value/Ebitda15.03
Forecast
1Y Price Target
$264.41Price Target Upside12.90% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering17
EPS Forecast (FY)12.31
Revenue Forecast (FY)$70.36B
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 generates revenue primarily through a mix of software, consulting/services, and infrastructure sales, typically sold to enterprise and government customers under recurring contracts, subscriptions, consumption-based arrangements, and project-b...
International Business Machines Earnings Call Summary
Earnings Call Date:Oct 21, 2026
(Q3-2026)
| % Change Since: |
Next Earnings Date:Jan 27, 2027
Earnings Call Sentiment Positive
The call was strongly positive. IBM reported accelerated revenue growth, broad-based software and infrastructure momentum, improved margins, record first-nine-month free cash flow margin, strong IBM Z and AI-related demand, and a higher free cash flow outlook. The main challenges were modest consulting growth, a consulting margin decline, higher CapEx, cash taxes and interest expense, expected moderation in transaction processing, and the operational complexity of scaling enterprise AI.Positive Updates
Accelerated Third-Quarter Revenue Growth
Third-quarter revenue growth accelerated to 6%, above the base case laid out in July, with growth across the segments led by software at 9%, infrastructure at 5%, and modest improvement in consulting.
Negative Updates
Consulting Growth Remained Modest
Consulting revenue grew 2% in the quarter. IBM said clients remain at different stages of AI adoption, and it expects only low to mid-single-digit consulting revenue growth for the full year.
Read all updates
Q3-2026 Updates
Positive
Negative
Accelerated Third-Quarter Revenue Growth
Third-quarter revenue growth accelerated to 6%, above the base case laid out in July, with growth across the segments led by software at 9%, infrastructure at 5%, and modest improvement in consulting.
Read all positive updates
Company Guidance
For 2026, IBM continues to expect revenue growth in the range of 4%-5%, with profit, free cash flow, and segment expectations anchored to a 4% base case, and has raised its expectation for free cash flow growth to more than $1 billion. Full-year software growth is expected to be approximately 7%-8%, with about 7% as the revised base case; hybrid cloud is expected to deliver double-digit growth, data mid-teens growth, automation low double-digit growth, transaction processing flat growth, infrastructure low double-digit infrastructure revenue growth, and consulting modest acceleration to low to mid-single digit revenue growth. IBM continues to expect 100 basis points of operating pre-tax margin expansion, while its operating tax rate expectation remains in the mid-teens, and it expects Red Hat to deliver double-digit growth in the fourth quarter of this year.International Business Machines Financial Statement Overview
Summary
Income Statement
78
Positive
Balance Sheet
56
Neutral
Cash Flow
73
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 69.87B | 67.54B | 62.75B | 61.86B | 60.53B | 57.35B |
| Gross Profit | 40.50B | 39.30B | 35.55B | 34.30B | 32.69B | 31.49B |
| EBITDA | 17.73B | 17.28B | 12.18B | 14.69B | 7.17B | 12.41B |
| Net Income | 11.17B | 10.59B | 6.02B | 7.50B | 1.64B | 5.74B |
Balance Sheet | ||||||
| Total Assets | 155.01B | 151.88B | 137.18B | 135.24B | 127.24B | 132.00B |
| Cash, Cash Equivalents and Short-Term Investments | 11.06B | 14.47B | 14.59B | 13.44B | 8.74B | 7.25B |
| Total Debt | 67.14B | 67.15B | 58.40B | 59.94B | 54.01B | 55.14B |
| Total Liabilities | 118.81B | 119.14B | 109.78B | 112.63B | 105.22B | 113.00B |
| Stockholders Equity | 35.54B | 32.65B | 27.31B | 22.53B | 21.94B | 18.90B |
Cash Flow | ||||||
| Free Cash Flow | 14.34B | 12.10B | 11.76B | 12.12B | 8.46B | 10.03B |
| Operating Cash Flow | 15.83B | 13.19B | 13.45B | 13.93B | 10.44B | 12.80B |
| Investing Cash Flow | -12.12B | -10.30B | -4.94B | -7.07B | -4.20B | -5.97B |
| Financing Cash Flow | -5.81B | -3.83B | -7.08B | -1.77B | -4.96B | -13.35B |
International Business Machines Technical Analysis
Positive
234.19
Price Trends
233.04
Positive
242.57
Positive
248.15
Positive
Market Momentum
4.79
Negative
71.22
Negative
92.21
Negative
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 234.19 is above the 20-day moving average (MA) of 230.67, above the 50-day MA of 233.04, and below the 200-day MA of 248.15, indicating a bullish trend. The MACD of 4.79 indicates Negative momentum. The RSI at 71.22 is Negative, neither overbought nor oversold. The STOCH value of 92.21 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 |
|---|---|---|---|---|---|---|---|
80 Outperform | $147.39B | 18.26 | 26.77% | 2.65% | 6.47% | 11.19% | |
80 Outperform | $49.35B | 15.56 | 32.90% | 4.24% | -0.64% | 5.69% | |
74 Outperform | $31.77B | 15.14 | 14.94% | 1.84% | 5.64% | -5.39% | |
74 Outperform | $19.78B | 14.89 | 15.94% | 4.11% | 0.38% | -8.33% | |
73 Outperform | $239.64B | 21.31 | 32.95% | 2.66% | 6.83% | 39.80% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
58 Neutral | $3.21B | 9.94 | 29.15% | ― | -0.62% | -70.92% |
* Technology Sector Average
IBM
International Business Machines
253.56
-51.60
-16.91%
ACN
Accenture
249.37
7.03
2.90%
CTSH
Cognizant
70.54
3.99
6.00%
INFY
Infosys
12.35
-4.38
-26.19%
WIT
Wipro
2.11
-0.47
-18.34%
KD
Kyndryl Holdings Incorporation
14.76
-14.14
-48.93%
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.