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International Business Machines Corporation
Dow 30 S&P 500
$218.1B
Market Cap
26.5
P/E
3.15
PEG
16.4%
ROCE
35.2%
ROE
1.97
D/E
18.7%
OPM
-25.6%
% from 52W High
36
α RS
🔍 IBM is showing a high-conviction setup because it matches 11 of 39 tracked screener presets, Sector RRG has Technology in the Leading quadrant with the trail still rolling over, and fcf_machines preset's Backtest win rate is 57.2% over 90 days. Net: Broad signal stack, not a recommendation. ? Conviction RRG Backtest
Sources
Conviction 11/39 · Technology in Leading quadrant · Backtest win rate 57.2%
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Currency-adjusted total returns for IBM including FX impact
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📈 Price History
Ratio Health
Excellent
Good
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By Category
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About

International Business Machines Corporation, together with its subsidiaries, provides integrated solutions and services in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. It operates through Software, Consulting, Infrastructure, and Financing segments. The Software segment offers hybrid cloud and AI platforms that allow clients to realize their digital and AI transformations across the applications, data, and environments in which they operate. The Consulting segment delivers strategy and technology services and intelligent operations, providing business transformation, technology implementation, managed services, application modernization, and AI-powered solutions. The Infrastructure segment provides on-premises and cloud-based server, and storage solutions, as well as life-cycle services for hybrid cloud infrastructure deployment. The Financing segment offers client and commercial financing, and facilitates IBM clients’ acquisition of hardware, software, and services. It operates a data streaming platform. The company has strategic partnerships with various companies, including hyperscalers, service providers, global system integrators, and software and hardware vendors that include Adobe, Amazon Web Services, Microsoft, Oracle, Salesforce, Samsung Electronics and SAP, and others. It also has a strategic collaboration with Arm Holdings plc for the development of new dual-architecture hardware that helps enterprises run future AI and data intensive workloads; strategic partnership with three.ws to advance ai-powered 3d agent technology; and collaboration with Lightwell to help strengthen open source software supply chain. Additionally, it offers operational resilience, logistics, and future-ready technology to the UK Ministry of Defence through Team ORION. The company was formerly known as Computing-Tabulating-Recording Co. and changed its name to International Business Machines Corporation in 1924. International Business Machines Corporation was incorporated in 1911 and is headquartered in Armonk, New York.

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3-Statement Financial Model
Bear / Base / Bull projections · DCF fair value · Reverse-DCF
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🎙 Management Tone Mixed ↓ Deteriorating 5 quarters Full tone analysis in Intelligence →
Mixed quarter Investor Presentation One-Pager? Q2 2026
Revenue
$17.2B
+1% YoY
Operating Pre-tax Income
$3.3B
+3% YoY
Operating Margin
19.2%
+0.3pp YoY
Operating Net Income
$2.8B
+5% YoY
What Went Right
  • Red Hat growth accelerated one point sequentially to 11%
  • Distributed Infrastructure revenue grew 37% with a record ~$500M backlog
  • First-half free cash flow of $4.8B was flat YoY; full-year FCF growth of ~$1B maintained
What to Watch
  • Transaction processing software revenue declined 9% as clients shifted CapEx to AI infrastructure
  • IBM Z revenue fell 42% in the quarter despite the cycle running at ~130% program-to-program
  • Only about a third of the low tens of slipped deals had closed in the first three weeks of Q3, creating timing risk
Management Guidance
  • Full-year constant currency revenue growth now expected at 4%-5%, down from prior 5%+
  • Software full-year growth guided to 6%-8%; infrastructure now expected to grow low single digits
  • Full-year operating pre-tax margin expansion of 100bps and free cash flow growth of about $1B reaffirmed
  • Q3 revenue growth consistent with full year; currency to be a 1.5-point headwind; Q3 operating pre-tax margin similar to Q2
Investor Lens
The thesis remains intact but is now more execution-dependent. Management argues the June quarter miss was timing, pointing to a third of slipped deals closing early in Q3, strong 80% recurring software base, and a record mainframe cycle. However, the wide guidance range reflects uncertainty over whether the CapEx shift persists. The maintained FCF outlook and 100bps margin expansion provide some cushion, but the burden of proof falls on second-half revenue acceleration.
From investor presentation · AI-generated analysis · Not investment advice
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📊 MIXED Mixed quarter: revenue +1% but FCF and margin guides held
Revenue
Q2 revenue was $17.2B, up 1% YoY at constant currency, missing prior expectations due to late-quarter CapEx deferrals. Software grew 5% (with data +18%, automation +3%, transaction processing -9%), consulting grew 1%, and infrastructure fell 7%.
Profitability
Operating net income rose 5% to $2.8B, with operating EPS up 5% to $2.93. GAAP net income was $2.2B, down 1% YoY.
Margins
Operating pre-tax margin expanded 30bps to 19.2%, despite gross margin down 70bps to 59.4%. Software segment margin was up 110bps and consulting up 160bps, while infrastructure declined 150bps; productivity actions offset revenue headwinds.
Balance Sheet
Cash and marketable securities were $8.2B at quarter end, down $6.3B from year-end. Debt stood at $62B, with $13B from financing. First-half free cash flow was $4.8B, flat YoY, and the company returned $3.2B in dividends.
Key Risks
Deal slippage from CapEx shifts is the key near-term risk—only a third of slipped deals closed early in Q3. IBM Z revenue declined 42%, and transaction processing software fell 9%. Hardware supply constraints and potential price increases could continue to distort buying patterns.
Outlook
Full-year revenue growth is now guided to 4%-5%, with software at 6%-8% and infrastructure at low single digits. The company maintained its ~$1B free cash flow growth guidance and expects 100bps of operating pre-tax margin expansion for the year.
Generated by AI · Q2 2026 results · Not investment advice
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✓ 📞 Earnings Call Transcripts (5 quarters) submit a missing quarter
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📞 Earnings Call Transcripts (5)
Q2 2026 Q2 2026 2026-07-22
Q2 results missed expectations due to delayed large CapEx deals, but early Q3 closures indicate deferred—not lost—demand. Recurring software revenue and AI-driven infrastructure remain strong, with full-year revenue growth now guided at 4%-5% and free cash flow expected to rise by $1 billion.
Q1 2026 Q1 2026 2026-04-22
Q1 2026 saw 6% revenue growth, 13% higher free cash flow, and strong margin expansion, led by double-digit gains in software and infrastructure. AI adoption and strategic acquisitions like Confluent are fueling growth, with guidance reaffirmed for 5%+ revenue and $1B free cash flow growth in 2026.
Q4 2025 Q4 2025 2026-01-28
Delivered record revenue and free cash flow growth in 2025, driven by strong software, infrastructure, and AI momentum. 2026 guidance calls for continued revenue and margin expansion, with productivity and M&A synergies offsetting acquisition dilution.
Q3 2025 Q3 2025 2025-10-22
Q3 saw 7% revenue growth, margin expansion, and record free cash flow, driven by strong AI and hybrid cloud demand. Full-year guidance was raised, with all segments accelerating and significant progress in automation, Red Hat, and mainframe.
Q2 2025 Q2 2025 2025-07-23
Q2 results exceeded expectations with strong growth in software, infrastructure, and AI-driven offerings. Full-year revenue growth is expected to accelerate to 5%+, with free cash flow guidance raised above $13.5 billion, supported by robust innovation and expanding client demand.
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Financial Model
Projections are built from each company's audited annual financials (Income Statement, Balance Sheet, Cash Flow) over the last 5 fiscal years. Forward assumptions — revenue growth %, EBITDA margin, D&A (USD millions), interest expense, tax rate, and capex — are AI-generated using historical context and refreshed twice a year: after the December results season and after the September/Q4 results season.

DCF Valuation
Fair Value = Σ(FCFt / (1+WACC)t) + Terminal Value. Terminal Value uses the Gordon Growth Model: FCF5 × (1+g) / (WACC−g). Default WACC: 10% (US risk-free ~4.5%, equity risk premium ~5.5%). Default terminal growth: 3% (long-run US nominal GDP proxy).

CAGR Tracker
Expected 5-year CAGR = (DCF Fair Value / Current Price)1/5 − 1. Assumes fair value is reached in exactly 5 years — a mechanical estimate only.

Data Sources & Limitations
Financial statements sourced from public filings. Prices updated daily. Forward assumptions are AI-generated. All monetary values in USD millions. Non-US ADR companies may have currency conversion inaccuracies. Models are point-in-time and do not update intra-quarter or account for M&A, macro shocks, or extraordinary items.

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Investment Risk:
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Information Sources:
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