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1. Company Snapshot

1.a. Company Description

International Business Machines Corporation provides integrated solutions and services worldwide.The company operates through four business segments: Software, Consulting, Infrastructure, and Financing.The Software segment offers hybrid cloud platform and software solutions, such as Red Hat, an enterprise open-source solutions; software for business automation, AIOps and management, integration, and application servers; data and artificial intelligence solutions; and security software and services for threat, data, and identity.


This segment also provides transaction processing software that supports clients' mission-critical and on-premise workloads in banking, airlines, and retail industries.The Consulting segment offers business transformation services, including strategy, business process design and operations, data and analytics, and system integration services; technology consulting services; and application and cloud platform services.The Infrastructure segment provides on-premises and cloud-based server and storage solutions for its clients' mission-critical and regulated workloads; and support services and solutions for hybrid cloud infrastructure, as well as remanufacturing and remarketing services for used equipment.


The Financing segment offers lease, installment payment, loan financing, and short-term working capital financing services.The company was formerly known as Computing-Tabulating-Recording Co. International Business Machines Corporation was incorporated in 1911 and is headquartered in Armonk, New York.

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1.b. Last Insights on IBM

IBM's recent performance is driven by its robust Q3 results, with revenue reaching $16.3 billion, up 9% year-over-year. The company's AI book of business exceeds $9.5 billion, fueling growth prospects. Strategic partnerships, particularly in hybrid cloud and AI, have positioned IBM for long-term profitable growth. Analysts view IBM as a "dynamic" stock to own in the AI revolution, with Wedbush analysts expecting another solid quarter. The company's dividend yield stands out at 2.14% in the tech sector, supporting dividend stability.

1.c. Company Highlights

2. IBM's Strong 2025 Earnings: A Reflection of its Diversified Portfolio

International Business Machines Corporation (IBM) reported its fourth-quarter 2025 earnings, showcasing a robust financial performance. The company achieved 9% total revenue growth, driven by software growth of 11%, with data and automation gaining strong momentum, growing 19% and 14%, respectively. IBM's earnings per share (EPS) came in at $4.52, beating analyst estimates of $4.31. For 2025, IBM reported $14.7 billion in free cash flow, up $2 billion year-over-year, and 12% growth in operating diluted EPS. The company's strong performance was reflected in its revenue growth, which was the highest in many years.

Publication Date: Feb -02

📋 Highlights
  • Revenue Growth & Free Cash Flow:: IBM achieved 6% revenue growth in 2025 (highest in years) and $14.7B free cash flow (up $2B YoY, highest in over a decade).
  • Software Segment Momentum:: Software grew 9% in 2025, driven by data (19%) and automation (14%) sub-segments, with consulting contributing $10.5B to GenAI bookings.
  • GenAI Book of Business:: Exceeded $12.5B, with software ($2B) and consulting ($10.5B) leading, reflecting strong adoption of AI services and hybrid cloud solutions.
  • 2026 Guidance:: Free cash flow growth to $15.7B (high single-digit YoY), 5%+ revenue growth, and 10% software growth from organic growth, M&A, and GenAI synergies.
  • Portfolio Shift & Margin Expansion:: $8.3B in acquisitions and $6.3B shareholder returns in 2025, with operating margin expected to expand by 1 point in 2026 to mid-teens.

Segment Performance

IBM's software segment grew 9% in 2025, with three of four sub-segments delivering double-digit growth rates. The company's data and automation businesses gained significant traction, driven by the increasing adoption of AI and hybrid cloud solutions. Consulting grew 1%, reflecting increased demand for AI services, while infrastructure delivered a robust quarter, growing 17%, driven by strength in Z17. The cumulative Gen AI book of business now stands at over $12.5 billion, with software over $2 billion and consulting over $10.5 billion.

Growth Prospects

IBM expects to sustain 5%+ revenue growth and grow free cash flow by about $1 billion in 2026. The company's software business is expected to grow over 10% in 2026, driven by organic growth, M&A synergies, and a strong bookings performance. The growth is led by automation, data, and hybrid cloud, with Red Hat growing in the mid-teens. IBM's GenAI book of business exceeded $12.5 billion, demonstrating strong momentum in consulting and software.

Valuation

IBM's current valuation metrics indicate a 'P/E Ratio' of 27.11, 'P/B Ratio' of 8.8, 'P/S Ratio' of 4.24, and 'EV/EBITDA' of 19.93. The 'Free Cash Flow Yield' is 4.6%, indicating a relatively attractive return for investors. Analysts estimate next year's revenue growth at 4.5%, which is slightly lower than IBM's guidance of 5%+ revenue growth. Given the company's strong performance and growth prospects, its current valuation appears reasonable.

Outlook

IBM is shifting its portfolio mix to higher-growth end markets, with a focus on category leaders in structurally growing markets. The company is well-positioned to capitalize on the growing demand for AI and hybrid cloud solutions, driven by its strong software and consulting capabilities. As AI-generated content increases, enterprises will prioritize control over their data and models, driving growth in IBM's infrastructure business.

3. NewsRoom

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AlphaQuest LLC Purchases 2,868 Shares of International Business Machines Corporation $IBM

10:26

Source: defenseworld.net

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International Business Machines Corporation $IBM is Pettee Investors Inc.’s 8th Largest Position

08:23

Source: defenseworld.net

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Forget Rigetti Computing: Serious Investors Are Placing Their Chips on This Enterprise‑Ready Quantum Platform

Feb -02

Source: fool.com

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Can IBM's Lucrative Federal Contracts Boost Its Future Growth?

Feb -02

Source: zacks.com

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Fusemachines and IBM Platinum Partner ModulAIre Announce Strategic Partnership to Deliver Enterprise AI Solutions Powered by Fusemachines AI Studio

Feb -02

Source: globenewswire.com

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Insider Buying: International Business Machines (NYSE:IBM) Director Purchases $304,000.00 in Stock

Feb -02

Source: defenseworld.net

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Money Concepts Capital Corp Has $6.18 Million Stock Position in International Business Machines Corporation $IBM

Feb -02

Source: defenseworld.net

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International Business Machines Corporation $IBM Shares Sold by Principal Financial Group Inc.

Feb -02

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (10.33%)

6. Segments

Software

Expected Growth: 12.1%

International Business Machines Corporation’s software products enable customers to integrate and manage their business operations, driving growth through enhanced operational efficiency, increased productivity, and improved decision-making capabilities.

Consulting

Expected Growth: 8.2%

IBM's Consulting segment is driven by increasing demand for digital transformation, cloud migration, and business process outsourcing. Clients seek innovative solutions to improve operational efficiency, driving growth in consulting services.

Infrastructure

Expected Growth: 10.4%

International Business Machines Corporation's IT infrastructure services, cloud and technology services will drive growth, propelled by digital transformation, increased adoption of hybrid cloud, and rising demand for IT outsourcing.

Financing

Expected Growth: 5.5%

IBM’s Financing segment growth is driven by increasing demand for IT acquisitions, particularly in cloud, analytics, and AI. This growth is further fueled by the need for flexible financing solutions, enabling businesses to invest in strategic IT initiatives.

Other - Divested Businesses

Expected Growth: 4.5%

IBM's divested businesses, like Watson Health, are expected to thrive in the growing digital health and AI markets, with increasing demand for cloud-based services driving growth.

Unallocated Other

Expected Growth: 4.3%

International Business Machines Corporation's growth is driven by increasing adoption of artificial intelligence and cloud computing, and strategic acquisitions, positioning it for long-term growth.

7. Detailed Products

Hardware

IBM offers a range of hardware products, including servers, storage systems, and networking equipment.

Software

IBM provides a wide range of software products, including AI, analytics, blockchain, cloud, and IoT solutions.

Services

IBM offers a range of services, including consulting, implementation, and management services for IT and business processes.

Cloud

IBM Cloud is a cloud computing platform that provides infrastructure, platform, and software as a service.

Artificial Intelligence

IBM offers a range of AI solutions, including Watson, that enable businesses to automate decision-making, improve customer service, and optimize operations.

Blockchain

IBM Blockchain is a decentralized, distributed ledger technology that enables secure, transparent, and tamper-proof transactions.

Internet of Things (IoT)

IBM IoT solutions enable businesses to connect, monitor, and analyze data from devices and sensors.

Quantum Computing

IBM Quantum is a quantum computing platform that enables businesses to solve complex problems and simulate complex systems.

8. International Business Machines Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for IBM is moderate, as there are alternative technology solutions available in the market. However, IBM's strong brand reputation and diversified product portfolio mitigate this threat to some extent.

Bargaining Power Of Customers

The bargaining power of customers is low for IBM, as the company has a large and diversified customer base. Additionally, IBM's products and services are often customized to meet specific customer needs, reducing the bargaining power of individual customers.

Bargaining Power Of Suppliers

The bargaining power of suppliers is low for IBM, as the company has a large and diversified supply chain. IBM's strong relationships with its suppliers and its ability to negotiate favorable terms also reduce the bargaining power of suppliers.

Threat Of New Entrants

The threat of new entrants is low for IBM, as the company operates in a highly competitive and capital-intensive industry. New entrants would need to invest heavily in research and development, marketing, and sales to compete with IBM's established brand and product portfolio.

Intensity Of Rivalry

The intensity of rivalry is high for IBM, as the company operates in a highly competitive industry with several established players. The market is characterized by frequent product innovations, aggressive pricing, and high marketing expenditures, which increases the intensity of rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 71.67%
Debt Cost 3.95%
Equity Weight 28.33%
Equity Cost 7.67%
WACC 5.00%
Leverage 253.02%

11. Quality Control: International Business Machines Corporation passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Microsoft

A-Score: 6.1/10

Value: 0.8

Growth: 7.9

Quality: 8.5

Yield: 2.0

Momentum: 8.0

Volatility: 9.3

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IBM

A-Score: 5.7/10

Value: 1.8

Growth: 3.0

Quality: 6.0

Yield: 6.0

Momentum: 9.0

Volatility: 8.3

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Salesforce

A-Score: 5.0/10

Value: 2.3

Growth: 8.9

Quality: 8.3

Yield: 1.0

Momentum: 2.5

Volatility: 7.0

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Accenture

A-Score: 4.8/10

Value: 3.1

Growth: 5.8

Quality: 7.7

Yield: 3.8

Momentum: 1.5

Volatility: 7.0

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Capgemini

A-Score: 4.5/10

Value: 4.3

Growth: 6.0

Quality: 5.8

Yield: 3.1

Momentum: 2.0

Volatility: 5.7

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SAP

A-Score: 4.2/10

Value: 1.1

Growth: 4.2

Quality: 8.4

Yield: 1.9

Momentum: 3.0

Volatility: 6.7

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

290.92$

Current Price

290.92$

Potential

-0.00%

Expected Cash-Flows