Start here if you're new
what it is
IBM sells software, tech services, and old-school infrastructure to huge companies that hate changing vendors.
how it gets paid
Last year L Bus. Mach made $67.5B in revenue. Software was the main engine at $29.7B, or 44% of sales.
why it's growing
Revenue grew 7.6% last year. Yahoo Finance shows an 84.49% earnings surprise. EDGAR-backed figures also show annual revenue of $67.5B.
what just happened
IBM posted quarterly EPS of $4.52 versus a $2.45 estimate, a huge beat on paper.
At a glance
A+ balance sheet — rock-solid finances — built to survive anything
85/100 earnings predictability — you can trust these numbers
26.9x trailing p/e — priced about right
2.2% dividend yield — cash in your pocket every quarter
13.0% return on capital — nothing to write home about
xvary composite: 79/100 — average
What they do
IBM sells software, tech services, and old-school infrastructure to huge companies that hate changing vendors.
IBM wins because your giant employer hates ripping out systems that already work. Software is 44% of 2024 revenue, and switching costs (changing vendors is expensive and painful) get real once your data, workflows, and contracts sit inside IBM. That inertia helps IBM hold a 25.0% operating margin even after historical sales fell 5.0%.
How they make money
$67.5B
annual revenue · their business grew +7.6% last year
Software
$29.7B
Consulting
$23.6B
Infrastructure
$14.9B
Financing
$0.7B
The products that matter
enterprise software and platforms
Software, services and infrastructure mix
$67.5B revenue
the snapshot data is thin here: this page only gives you one $67.5B revenue bucket, so what matters is whether higher-growth software can keep offsetting slower legacy businesses.
entire company view
Key numbers
26.9x
trailing p/e
That is the price tag on IBM's current earnings, and it looks rich next to a historical sales growth rate of -5.0%.
25.0%
operating margin
Operating margin means profit after running the business, before interest and taxes, so what: IBM still squeezes solid cash from mature operations.
$55.2B
long-term debt
That debt load is real, even with an A+ balance sheet grade, and it matters if rates stay high or growth cools.
13.0%
return on capital
Return on capital means profit earned on the money tied up in the business, so what: IBM is still productive, just not elite.
Financial health
A+
strength
- balance sheet grade A+ — near the highest rating possible
- risk rank 1 — safer than 95% of stocks
- price stability 85 / 100
- long-term debt $55.2B (19% of capital)
- net profit margin 17.6% — keeps 18 cents of every dollar in revenue
- return on equity 32% — $0.32 profit for every $1 investors have put in
A+ with balance sheet grade and risk rank standing out. your money faces less risk here than at most public companies.
Total return vs. market
You invested $10,000 in IBM 3 years ago → it's now worth $23,390.
The index would have given you $14,770.
source: institutional data · total return
What just happened
beat estimates
IBM posted quarterly EPS of $4.52 versus a $2.45 estimate, a huge beat on paper.
Yahoo Finance shows an 84.49% earnings surprise. EDGAR-backed figures also show annual revenue of $67.5B, up 7.6%, and gross margin of 57.2%.
$17.6B
revenue
$4.52
eps
57.2%
gross margin
the number that mattered
The 84.49% EPS surprise matters because IBM is a mature company, and mature companies are not supposed to beat estimates by that much.
-
our 2026 earnings-per-share estimate is now higher by a quarter.
-
the outlook for each of ibm’s businesses is still positive.
-
the core software operations likely finished 2025 on solid footing.
-
revenue growth hovered around 10% through the first nine months led by the red hat segment, which continues to benefit from hybrid cloud growth.
-
the smaller automation unit posted a 24% gain in the september interim (thanks in part to hashicorp.), but transaction processing revenues inched lower, and may remain the lone drag companywide.
source: company earnings report, 2026
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What could go wrong
the top threat is hybrid cloud momentum slowing while transaction processing stays soft.
high
Software growth loses the plot
Revenue growth ran around 10% through the first nine months, led by Red Hat and hybrid cloud. If that engine cools, the premium valuation has less support.
At 26.9x trailing earnings and with a $70B revenue estimate on the page, IBM needs software to keep carrying the story.
med
Transaction processing stays the lone drag
Management already has one weak spot in view: transaction processing revenues inched lower and may remain the laggard companywide.
That matters because mix shift only works if the slower legacy pieces do not erase gains elsewhere.
med
Enterprise churn is low until it is not
IBM's moat depends on customers sticking with mission-critical systems. If large enterprise clients start moving workloads or budgets elsewhere, the pain shows up slowly and then all at once.
This is a $67.5B revenue base. Small retention changes matter when the denominator is that large.
low
Expectation risk after the rerating
A 2.2% yield and A+ balance sheet can cushion sentiment, but they do not fully protect a stock already trading near a $332 target midpoint.
When current price and target sit close together, execution matters more than narrative expansion.
If IBM misses the implied ~4% path to the $70B revenue estimate while transaction processing stays soft, the market is left paying a software-like multiple for a much slower story.
source: institutional data · regulatory filings · risk analysis
Pay attention to
trend
can IBM hold growth above the $70B path
The 2026 revenue estimate is $70B versus $67.5B last year. That is the pace the stock now needs to justify.
risk
transaction processing weakness
It already inched lower in the september interim. If that drag widens, software wins have to work even harder.
metric
26.9x trailing earnings
That multiple tells you IBM is being graded on execution now, not nostalgia.
calendar
next report, same question
You want the next earnings update to show software strength and no deeper slump in the older transaction-heavy businesses.
Analyst rankings
short-term outlook
average
momentum score 3 — in human-speak, analysts do not see a major near-term edge one way or the other.
risk profile
safest 5%
stability score 1 — lower risk than almost any stock in the coverage set.
chart momentum
top 20%
technical score 2 — analysts expect above-average price performance in the year ahead.
earnings predictability
85 / 100
The setup is dependable. You usually get fewer shocks here than in most tech names.
source: institutional data
Institutional activity
institutions have been net buying for 3 consecutive quarters — 1,645 buyers vs. 1,298 sellers in 3q2025. total institutional holdings: 0.6B shares. net buying for 3 quarters.
source: institutional data
Price targets
3-5 year target range
$239
$425
$306
current price
$332
target midpoint · +9% from current · 3-5yr high: $425
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