Business 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. The Software division provides hybrid cloud platforms and a range of software offerings, including Red Hat's enterprise open-source solutions. It also develops software for business automation, AIOps and management, integration, and application servers, in addition to data and artificial intelligence tools. This segment further supplies security software and services for threat, data, and identity management, and offers critical transaction processing software that supports essential on-premise workloads for industries such as banking, airlines, and retail. The Consulting arm delivers business transformation services, which encompass strategy development, business process design and operational improvements, data and analytics insights, and system integration. It additionally provides technology consulting and specialized application and cloud platform services. IBM's Infrastructure segment offers both on-premises and cloud-based server and storage solutions, specifically tailored for clients' crucial and regulated operations. It also extends support and solutions for hybrid cloud infrastructure, alongside remanufacturing and remarketing services for used equipment. The Financing segment provides various financial services, such as leasing, installment payment plans, loan financing, and short-term working capital solutions. Originally established in 1911 as the Computing-Tabulating-Recording Co., the company is now known as International Business Machines Corporation and maintains its headquarters in Armonk, New York.
Business History
Generated: Jun 26, 2026 3:08amPrice Overview
Last updated: Jun 26, 2026 3:05am (1d ago)Price History (1 Year)
Revenue & Net Income Trend
| Period | Revenue | Net Income | Net Margin | YoY/QoQ |
|---|
Key Metrics
EPS (Diluted): 11.36
Total Equity: $32.65B
Shares: 948,700,000
Total Debt: $64.61B
Cash: $13.64B
EBITDA: $17.28B
Total Debt: $64.61B
Cash: $13.64B
Revenue: $67.54B
Revenue: $67.54B
Revenue: $67.54B
Total Equity: $32.65B
Tax Rate: -2.3%
Equity: $32.65B
Total Debt: $64.61B
Cash: $13.64B
Current Liabilities: $38.66B
Long-Term Debt: $57.38B
Total Debt: $64.61B
Total Equity: $32.65B
Shares: 948,700,000
Shares: 948,700,000
CapEx: -$1.62B
Shares: 948,700,000
Stock Price: $258.27
Net Income: $10.59B
Industry Benchmarks
Advanced Analysis Forensic deep-dive · three lenses
IBM is showing genuine business improvement: revenue grew from 57.4B in 2021 to 67.5B in 2025, gross margin expanded materially from 54.9% to 59.5%, and operating margin moved from 12% to roughly 15-16%. Net income jumped to 10.59B in 2025 and FCF has been consistently strong at 8.5B-12.1B annually. Earnings quality is high: OCF/NI of 2.79x, accruals at -4.8% of assets, Beneish M of -2.37 and Altman Z of 3.3 all corroborate that the reported numbers are real cash. The blemish is the capital structure and per-share discipline. Net debt is roughly 50B against only 14.5B liquid cash, so the 11.6B annual FCF is partly spoken for by debt service and the 6B+ dividend. Diluted shares still crept from 904.6M to 948.7M (1.2% CAGR), and buybacks only offset 48.6% of SBC, so equity holders are quietly being diluted despite the mature-company optics. Insider tape is almost entirely awards and one gift, no meaningful open-market buying, so the 'significant insider buying' framing is overstated. Net: a durable, cash-generative franchise with credible margin recovery and clean books, constrained by a leveraged balance sheet and mild per-share leakage. Solid, not Fortress.
Verify before trusting this (6)
- Debt maturity ladder and weighted interest cost on the ~50B net debt position
- Software segment (Red Hat, automation) organic growth rate vs. consulting and infrastructure mix
- Sustainability of 59.5% gross margin - how much is software mix shift vs. one-off
- SBC dollar amount and dilution trajectory post-HashiCorp closing
- Pension accounting tailwind/headwind contribution to operating income
- Customer concentration and backlog conversion in consulting segment
The e2e synthesis lands at 'Reasonable Premium' and the company-quality lens confirms a Solid (not fortress) business with ~50B net debt and creeping share count. At $258 and a $243B market cap, IBM trades around 23-25x forward earnings and roughly 5x sales for a business growing mid-single digits - that already prices in a successful hybrid-cloud/software mix shift. The bull case (Red Hat-led recurring revenue compounding, margin expansion) is largely what you are paying for; the bear case (services rent extraction, integration fatigue) gets little discount.
Verify before trusting this (5)
- Software segment organic growth ex-Red Hat to confirm mix shift is real
- Free cash flow conversion vs guidance and one-time items (pension, divestitures)
- Net debt trajectory and any large M&A that could re-lever
- Share count change net of SBC over trailing four quarters
- Forward guidance on consulting margins and signings backlog
IBM is catching a powerful narrative upgrade in real time. The sub-1nm chip headlines hit a market that is starved for credible, non-Nvidia AI-infrastructure stories, and the press is explicitly framing IBM in AI-chip and quantum terms - language that has been worth multiple turns of multiple elsewhere in tech. That is grafting an AI-adjacent story onto an otherwise moderate-intensity, low-cult steady-compounder narrative, and it is doing so right as JPMorgan and others mark up targets (consensus $314.83 vs $258.27, with fresh revisions averaging $322).
Verify before trusting this (4)
- Whether sell-side keeps revising targets up into earnings or this is a one-week headline pop
- Any commercialization or licensing detail on the sub-1nm tech - without a revenue path the AI framing fades
- Sector rotation: if mega-cap AI hardware leadership cracks, IBM's halo trade unwinds fast
- VIX direction - a move back above 22 would mute even good single-name news
Deep Analysis
Pre-flight intelligence scans the company first, then routes to the right analytical methods.
Income Statement (Annual)
Last updated: Jun 26, 2026 3:09am (1d ago)| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue | $57.4B | $60.5B | $61.9B | $62.8B | $67.5B |
| Cost of Revenue | $25.9B | $27.8B | $27.6B | $27.2B | $27.4B |
| Gross Profit | $31.5B | $32.7B | $34.3B | $35.6B | $40.2B |
| Operating Expenses | $24.6B | $24.5B | $24.5B | $25.5B | $29.9B |
| Operating Income | $6.9B | $8.2B | $9.8B | $10.1B | $10.3B |
| Net Income | $5.7B | $1.6B | $7.5B | $6.0B | $10.6B |
| EBITDA | $12.4B | $7.2B | $14.7B | $12.2B | $17.3B |
| EPS | $6.41 | $1.82 | $8.23 | $6.53 | $11.36 |
| EPS (Diluted) | — | — | — | — | — |
Balance Sheet (Annual)
Last updated: Jun 26, 2026 3:05am (1d ago)| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Cash & Equivalents | $6.7B | $7.9B | $13.1B | $13.9B | $13.6B |
| Total Current Assets | $29.5B | $29.1B | $32.9B | $34.5B | $35.9B |
| Total Assets | $132.0B | $127.2B | $135.2B | $137.2B | $151.9B |
| Current Liabilities | $33.6B | $31.5B | $34.1B | $33.1B | $38.7B |
| Long-Term Debt | $44.9B | $46.0B | $49.8B | $49.9B | $57.4B |
| Total Liabilities | $113.0B | $105.2B | $112.6B | $109.8B | $119.1B |
| Total Equity | $18.9B | $21.9B | $22.5B | $27.3B | $32.6B |
| Retained Earnings | $154.2B | $149.8B | $151.3B | $151.2B | $155.6B |
Cash Flow (Annual)
Last updated: Jun 22, 2026 3:04am (5d ago)| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Operating Cash Flow | $12.8B | $10.4B | $13.9B | $13.4B | $13.2B |
| Capital Expenditure | -$2.8B | -$2.0B | -$1.8B | -$1.7B | -$1.6B |
| Free Cash Flow | $10.0B | $8.5B | $12.1B | $11.8B | $11.6B |
| Acquisitions (net) | -$3.2B | -$1.1B | -$5.1B | -$2.6B | -$8.3B |
| Debt Repayment | — | — | — | — | — |
| Dividends Paid | — | — | — | — | — |
| Stock Buybacks | -$319.0M | -$407.0M | -$402.0M | $0 | -$1.0B |
| Net Change in Cash | -$6.7B | $1.0B | $5.1B | $1.1B | -$520.0M |
Analyst Estimates (Annual)
Last updated: Jun 26, 2026 3:05am (1d ago)| Metric | 2027 | 2028 | 2029 | 2030 |
|---|---|---|---|---|
| Revenue |
$74.6B $74.0B – $75.5B
|
$78.9B $78.9B – $78.9B
|
$82.2B $81.1B – $83.1B
|
$82.9B $81.9B – $83.8B
|
| EBITDA |
$15.3B $15.1B – $15.4B
|
$16.1B $16.1B – $16.1B
|
$16.8B $16.6B – $17.0B
|
$17.0B $16.7B – $17.1B
|
| Net Income |
$12.6B $12.0B – $13.3B
|
$14.1B $12.9B – $15.3B
|
$13.6B $13.4B – $13.8B
|
$12.1B $11.9B – $12.3B
|
| EPS | — | — | — | — |
Growth Trends (YoY %)
Last updated: Jun 26, 2026 3:09am (1d ago)| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Revenue Growth | +5.5% | +2.2% | +1.4% | +7.6% |
| Gross Profit Growth | +3.8% | +4.9% | +3.6% | +13.0% |
| Operating Income Growth | +19.1% | +20.1% | +2.6% | +2.5% |
| Net Income Growth | -71.4% | +357.4% | -19.7% | +75.9% |
| EBITDA Growth | -42.2% | +104.8% | -17.1% | +42.0% |
Insider Trading (Recent)
Last updated: Jun 26, 2026 3:09am (1d ago)All SEC Form 4 codes
- P Purchase
- Open-market or private purchase of shares.
- S Sale
- Open-market or private sale of shares.
- A Award / grant
- Grant or award of securities (RSUs, options, etc.) under Rule 16b-3.
- D Return to issuer
- Securities disposed back to the company under Rule 16b-3.
- F In-kind (tax)
- Shares withheld or delivered to pay the option-exercise price or tax — not an open-market sale.
- I Discretionary
- Discretionary transaction under an employee plan — Rule 16b-3(f).
- M Option exercise
- Exercise or conversion of a derivative (option/RSU) into shares — exempt.
- C Conversion
- Conversion of a derivative security into the underlying shares.
- E Short expiration
- Expiration of a short derivative position.
- H Long expiration
- Expiration or cancellation of a long derivative position with value received.
- O OTM exercise
- Exercise of an out-of-the-money derivative.
- X ITM exercise
- Exercise of an in-the-money or at-the-money derivative.
- G Gift
- Bona fide gift of securities.
- L Small acquisition
- Small acquisition under Rule 16a-6.
- W Inheritance
- Acquisition or disposition by will or the laws of descent.
- Z Voting trust
- Deposit into or withdrawal from a voting trust.
- J Other
- Other acquisition or disposition (explained in a Form 4 footnote).
- K Equity swap
- Transaction in an equity swap or similar instrument.
- U Tender / buyout
- Disposition via tender of shares in a change-of-control transaction.
Compensation-plan codes (A, D, F, M) are routine and rarely directional. Open-market P (buy) and S (sale) carry the most signal.
| Date | Insider | Type | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-06-04 | Fehring Nicolas A. | G-Gift | 400.00 | $0.00 | $0 |
| 2026-03-31 | Laguarta Ramon | A-Award | 126.00 | $0.00 | $0 |
| 2026-03-31 | Brown Marianne Catherine | A-Award | 377.00 | $0.00 | $0 |
| 2026-03-31 | Buberl Thomas | A-Award | 377.00 | $0.00 | $0 |
| 2026-03-31 | FARR DAVID N | A-Award | 243.00 | $0.00 | $0 |
| 2026-03-31 | Gorsky Alex | A-Award | 444.00 | $0.00 | $0 |
| 2026-03-31 | HOWARD MICHELLE J | A-Award | 264.00 | $0.00 | $0 |
| 2026-03-31 | LIVERIS ANDREW N | A-Award | 403.00 | $0.00 | $0 |
| 2026-03-31 | MCNABB FREDERICK WILLIAM III | A-Award | 377.00 | $0.00 | $0 |
| 2026-03-31 | Miebach Michael | A-Award | 377.00 | $0.00 | $0 |
| 2026-03-31 | VOSER PETER R. | A-Award | 413.00 | $0.00 | $0 |
| 2026-03-31 | WADDELL FREDERICK H | A-Award | 403.00 | $0.00 | $0 |
| 2026-03-31 | ZOLLAR ALFRED W | A-Award | 377.00 | $0.00 | $0 |
| 2026-03-31 | Pollack Martha E | A-Award | 243.00 | $0.00 | $0 |
| 2026-03-01 | Laguarta Ramon | 0.00 | $0.00 | $0 | |
| 2026-02-26 | Robinson Anne | A-Award | 25,363.00 | $243.22 | $6.2M |
| 2026-02-26 | Robinson Anne | A-Award | 6,341.00 | $0.00 | $0 |
| 2026-02-26 | LAMOREAUX NICKLE JACLYN | A-Award | 25,138.00 | $243.22 | $6.1M |
| 2026-02-26 | LAMOREAUX NICKLE JACLYN | A-Award | 6,285.00 | $0.00 | $0 |
| 2026-02-26 | KRISHNA ARVIND | A-Award | 90,071.00 | $243.22 | $21.9M |
Dividend History (Last 20)
Last updated: Jun 21, 2026 6:50pm (5d ago)| Date | Dividend | Declaration | Record | Payment |
|---|---|---|---|---|
| 2026-05-08 | $1.69 | 2026-04-22 | 2026-05-08 | 2026-06-10 |
| 2026-02-10 | $1.68 | 2026-01-28 | 2026-02-10 | 2026-03-10 |
| 2025-11-10 | $1.68 | 2025-10-22 | 2025-11-10 | 2025-12-10 |
| 2025-08-08 | $1.68 | 2025-07-23 | 2025-08-08 | 2025-09-10 |
| 2025-05-09 | $1.68 | 2025-04-29 | 2025-05-09 | 2025-06-10 |
| 2025-02-10 | $1.67 | 2025-01-28 | 2025-02-10 | 2025-03-10 |
| 2024-11-12 | $1.67 | 2024-10-30 | 2024-11-12 | 2024-12-10 |
| 2024-08-09 | $1.67 | 2024-07-29 | 2024-08-09 | 2024-09-10 |
| 2024-05-09 | $1.67 | 2024-04-30 | 2024-05-10 | 2024-06-10 |
| 2024-02-08 | $1.66 | 2024-01-30 | 2024-02-09 | 2024-03-09 |
| 2023-11-09 | $1.66 | 2023-10-30 | 2023-11-10 | 2023-12-09 |
| 2023-08-09 | $1.66 | 2023-07-24 | 2023-08-10 | 2023-09-09 |
| 2023-05-09 | $1.66 | 2023-04-25 | 2023-05-10 | 2023-06-10 |
| 2023-02-09 | $1.65 | 2023-01-31 | 2023-02-10 | 2023-03-10 |
| 2022-11-09 | $1.65 | 2022-10-25 | 2022-11-10 | 2022-12-10 |
| 2022-08-09 | $1.65 | 2022-07-25 | 2022-08-10 | 2022-09-10 |
| 2022-05-09 | $1.65 | 2022-04-26 | 2022-05-10 | 2022-06-10 |
| 2022-02-10 | $1.64 | 2022-02-01 | 2022-02-11 | 2022-03-10 |
| 2021-11-09 | $1.64 | 2021-10-26 | 2021-11-10 | 2021-12-10 |
| 2021-08-09 | $1.64 | 2021-07-27 | 2021-08-10 | 2021-09-10 |
Narrative Economics
market-narrative step).
Delvantic AI Findings
The raw numbers tell a more cyclical story than the "steady compounder" narrative admits. Q1 2026 revenue of $15.92B against Q4 2025's $19.69B is the seasonal mainframe-cycle whiplash, not deterioration — but it matters because Q4 2025 net income of $5.60B (28.4% margin) is doing enormous work in the TTM figures. Strip that quarter out and you're looking at a business running 7-13% net margins, not the 15.7% the ratios advertise. The 18.8% earnings CAGR and 75.9% recent earnings YoY are flattered by a 2024 base that included a -$330M Q3 print. Real underlying earnings power is closer to $9-10B normalized, not the $10.59B 2025 figure. At a $242.74B market cap, that's ~24-27x normalized earnings — richer than the headline 22.5x PE suggests.
The transformation thesis has some genuine support: 2021→2025 revenue went $57.35B → $67.54B (4.5% CAGR), operating income $6.87B → $10.33B (op margin 12.0% → 15.3%), and FCF of $11.58B on $13.19B OCF is high-quality. But the fcf_cagr of -2.3% directly contradicts the bull case that Red Hat is driving accelerating cash generation — five years in, FCF is not compounding. That's the single most damning number in the file and the synthesis models gloss over it. Current ratio of 0.93 with cash of only $13.64B and an undisclosed debt load (the file is missing total debt, which for IBM historically runs $50B+) is not the fortress balance sheet implied by "mature earner."
I disagree with the "Market Tailwinds" framing and partially dissent from the "Reasonable Premium" verdict. The Market Forces module contradicts itself — calling tailwinds while flagging mainframe cycle headwinds and FCF conversion concerns in the same sentence. The Pre-Flight note claims a "trailing P/E ~16x, forward ~14x" which is flatly wrong given the canonical 22.5x TTM PE; that's a meaningful error that propagates into the "value multiples" framing. IBM is not trading at value multiples. EV/EBITDA of 17.1x and P/S of 4.1x for a 4.5% revenue grower is a full price. P/B of 8.5x with ROIC of only 8.98% means the market is paying eight times book for a business earning roughly its cost of capital — that's a quality premium that requires the software-mix-shift story to actually deliver accelerating ROIC, which the FCF trend doesn't yet support.
The contrarian read: IBM has run from the low $100s to $258 over roughly three years on multiple expansion more than earnings growth. The insider activity is uniformly awards and a gift — zero open-market purchases, which contradicts the "Significant Insider Buying" secondary signal (that signal appears to be miscategorizing equity comp as conviction buying — a real data-quality flag). The 2.27% dividend yield is no longer the support it was at $130; at $258 the yield-buyer floor is gone. If Q2/Q3 2026 mainframe revenue normalizes lower as the z17 cycle matures, consensus earnings get cut, and a 22x multiple on $8.50-9.00 normalized EPS gets you to $190-200 fast. Conversely, the bull case requires software segment growth to visibly accelerate past 15% and consulting to stop bleeding — neither is in the quarterly data provided. I'd peg fair value at $210-225 on normalized earnings and a 20x multiple appropriate for a 4-5% grower with margin tailwinds but unproven FCF compounding. The synthesis "Reasonable Premium" verdict is directionally correct but too generous given the FCF CAGR contradiction and the propagated PE error.
GPT Critique
In analyzing IBM's financial trajectory, I see a company grappling with the complexities of a legacy transformation amidst a volatile market cycle. IBM's quarterly revenue and net income figures reveal significant fluctuations, notably the sharp drop from Q4 2025's $19.69B revenue and 28.4% margin to Q1 2026's $15.92B revenue with a 7.6% margin. This variance is reflective of seasonal influences, particularly the mainframe sales cycle, rather than a fundamental decline. However, the consistent year-over-year revenue growth from $57.35B in 2021 to $67.54B in 2025 — a CAGR of 4.5% — alongside an operating margin increase from 12.0% to 15.3% suggests some success in the transition towards hybrid cloud and AI services. Despite this, the negative FCF CAGR of -2.3% underscores challenges in translating top-line growth into sustainable cash flow, a critical metric for evaluating IBM's transformation success.
I agree with Opus's assertion that IBM's valuation appears stretched, particularly when considering the company's normalized earnings potential. Opus points out that IBM's net income of $10.59B in 2025, and its associated TTM PE of 22.5x, might be inflated by seasonally strong quarters. Adjusting for these effects, Opus estimates normalized earnings at $9-10B, which indeed places IBM at a steeper 24-27x earnings multiple. I concur that such a multiple demands robust evidence of transformation success, which the current FCF trajectory does not support. Opus also rightly highlights potential discrepancies in the "Market Tailwinds" and "Reasonable Premium" narratives, noting contradictions and errors in the canonical PE ratios and valuation assumptions.
However, I diverge slightly from Opus on the impact of IBM's insider transactions and dividend support. While Opus correctly notes the absence of open-market insider purchases, which could indicate lack of confidence, the consistent dividend yield of 2.27% — though diminished at current prices — still offers some investor appeal in a volatile market, particularly for income-focused portfolios. Furthermore, while Opus critiques the "Significant Insider Buying" signal, it's crucial to contextualize that insider equity awards can still reflect management's vested interest in the company's long-term strategy, even if not indicative of immediate bullish sentiment.
A careful skeptic might argue that both Opus's and my analyses overemphasize the negative FCF trend without adequately considering IBM's strategic investments in AI and cloud which, although not yet yielding visible cash flow growth, could potentially drive future profitability. They might also suggest that the valuation metrics should account for IBM's substantial cash generation capability and its historical resilience in adapting to technological shifts.