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XBRL · SEC EDGAR2007–2025(19yr)| Metric | FY 2007 | FY 2008 | FY 2009 | FY 2010 | FY 2011 | FY 2012 | FY 2013 | FY 2014 | FY 2015 | FY 2016 | FY 2017 | FY 2018 | FY 2019 | FY 2020 | FY 2021 | FY 2022 | FY 2023 | FY 2024 | FY 2025Latest | YoY |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | $98.8B | $103.6B | $95.8B | $99.9B | $106.9B | $104.5B | $99.8B | $92.8B | $81.7B | $79.9B | $79.1B | $79.6B | $77.1B | $73.6B | $57.4B | $60.5B | $61.9B | $62.8B | $67.5B | +7.6% |
| Gross Profit | $41.7B | $45.7B | $43.8B | $46.0B | $50.1B | $50.3B | $48.5B | $46.4B | $40.7B | $38.3B | $36.2B | $36.9B | $36.5B | $35.6B | $31.5B | $32.7B | $34.3B | $35.6B | $39.3B | +10.5% |
| Gross Margin | 42.2% | 44.1% | 45.7% | 46.1% | 46.9% | 48.1% | 48.6% | 50.0% | 49.8% | 47.9% | 45.8% | 46.4% | 47.3% | 48.3% | 54.9% | 54.0% | 55.4% | 56.7% | 58.2% | +1.5pp |
| Net Income | $10.4B | $12.3B | $13.4B | $14.8B | $15.9B | $16.6B | $16.5B | $12.0B | $13.2B | $11.9B | $5.8B | $8.7B | $9.4B | $5.6B | $5.7B | $1.6B | $7.5B | $6.0B | $10.6B | +75.9% |
| Net Margin | 10.5% | 11.9% | 14.0% | 14.9% | 14.8% | 15.9% | 16.5% | 13.0% | 16.1% | 14.9% | 7.3% | 11.0% | 12.2% | 7.6% | 10.0% | 2.7% | 12.1% | 9.6% | 15.7% | +6.1pp |
| Free Cash Flow | — | $14.6B | $17.3B | $15.4B | — | — | — | $13.1B | $13.4B | $13.4B | $13.5B | $11.9B | $12.5B | $15.6B | $10.7B | $9.1B | $12.7B | $12.4B | $12.1B | -2.4% |
| FCF Margin | — | 14.1% | 18.1% | 15.4% | — | — | — | 14.1% | 16.4% | 16.8% | 17.1% | 14.9% | 16.2% | 21.2% | 18.7% | 15.0% | 20.5% | 19.8% | 17.9% | -1.8pp |
| EPS (Diluted) | $7.15 | $8.89 | $10.01 | $11.52 | $13.06 | $14.37 | $14.94 | $11.90 | $13.42 | $12.38 | $6.14 | $9.52 | $10.56 | $6.23 | $6.35 | $1.80 | $8.14 | $6.43 | $11.17 | +73.7% |
1. THE BIG PICTURE
IBM has moved past its era of structural decline by tethering its deep-rooted enterprise incumbency to a high-growth software and AI layer. IBM is no longer just selling boxes; it is leveraging a "mission-critical" hardware base to pull through high-margin consulting and software contracts, creating a durable ecosystem that is currently outgrowing several of its more specialized peers.
2. WHERE THE RISKS HIT HARDEST
IBM’s primary strength—its deep incumbency in mission-critical infrastructure—is increasingly threatened by cloud service providers who are using rapid service delivery innovation to compete directly with IBM’s traditional server and storage systems (10-K Item 1). This competitive pressure is compounded by a "partner-competitor overlap," where firms IBM relies on for strategic alliances are simultaneously attempting to disrupt its core hardware business. Furthermore, IBM’s massive global footprint is a double-edged sword; while it provides "breadth and depth," the fact that 60% of revenue is generated outside the U.S. means that geopolitical friction or a strengthening dollar can abruptly erase gains made in AI and software (Risks).
3. WHAT THE NUMBERS SAY TOGETHER
The financial data reveals a company operating at two different speeds. While total revenue grew 7.6% over the last twelve months, the most recent quarter saw a 12% jump, fueled by a massive 67% surge in IBM Z mainframe revenue (8-K). This suggests that IBM’s current momentum is heavily supported by a cyclical hardware refresh, which may be masking the much slower 3% growth in the Consulting segment.
Despite having the lowest net margin in its peer group at 7.4%—well behind Oracle’s 25.6%—IBM remains a highly efficient cash generator. Its free cash flow (FCFFCFFree Cash Flow — cash left after paying for operations and capital investments; what the company can actually spend, save, or return to shareholders) margin of 17.6% ranks third among its peers, outperforming Oracle's negative FCFFCFFree Cash Flow — cash left after paying for operations and capital investments; what the company can actually spend, save, or return to shareholders position (Peer Benchmarking). This cash efficiency is vital because IBM carries a heavy debt load; with $51.5 billion in net debt against $11.1 billion in annual FCFFCFFree Cash Flow — cash left after paying for operations and capital investments; what the company can actually spend, save, or return to shareholders, IBM maintains a 4.7x net leverage ratio. Market sentiment remains stable, however, with short interest at a low 2.3% of the float, suggesting investors are comfortable with this debt-to-cash-flow profile for now.
4. IS IT WORTH IT AT THIS PRICE?
At 18.6x forward earnings, IBM is trading exactly in line with the peer median. This valuation implies the market is pricing in approximately 3.0% long-term growth (CAPM analysis). This appears to be a modest expectation given that IBM’s actual revenue growth of 7.6% is significantly higher than the implied rate.
The current price is justified by IBM’s superior dividend yield of 2.6%, which leads most of its peers, including Cisco (2.2%) and Salesforce (0.9%). However, the valuation is sensitive to growth plateaus; if long-term growth expectations were to slip to 2.5%, the justified multiple would fall to 17.0x, representing roughly 9% downside. Investors are essentially paying a fair price for a stable cash-flow engine, but they are assuming the current AI and mainframe momentum can offset the drag of its high debt.
5. WHAT WOULD CHANGE THIS VIEW?
- Cautious if Infrastructure revenue growth turns negative, indicating that the current mainframe refresh cycle has peaked and can no longer subsidize slower growth in other divisions.
- Constructive if Consulting revenue growth accelerates into the high single digits, proving that the $12.5 billion AI "book of business" is successfully converting into realized, high-margin service revenue.
6. BOTTOM LINE
Structural Advantage: Deep enterprise incumbency and a captive financing arm that facilitates large-scale technology adoption across hybrid cloud environments.
Bottom Line: IBM is a fairly valued, high-yield defensive play that has successfully found a second life in AI, though its high leverage requires disciplined execution.
1. Top 5 Material Risks
- Economic Environment: A decrease in demand for IBM’s products and solutions, driven by general economic conditions or changing client buying patterns, directly impacts revenue and profit.
- Innovation Initiatives: IBM’s long-term success depends on its ability to scale and commercialize disruptive technologies like hybrid cloud, AI, and quantum computing; failure to do so or to attract a developer ecosystem threatens market share and profit margins.
- Reputational Damage: IBM’s brand is susceptible to negative perceptions arising from product defects, cybersecurity incidents, legal proceedings, or significant client disputes, which could hinder IBM's ability to attract customers and talent.
- Growth Opportunity Execution: Investments in high-value, competitive segments like AI carry uncertainty regarding client adoption and economic models; failure to anticipate market shifts may lead to declining demand or increased costs.
- Intellectual Property Protection: IBM’s patents may not prevent competitors from developing similar offerings, and IBM faces risks from aggressive patent enforcement by third parties, including non-practicing entities.
2. Company-Specific Risks
- Acquisition and Divestiture Integration: IBM faces risks in achieving anticipated revenue improvements and cost savings from transactions, as well as the potential for assuming liabilities or failing to retain key personnel from acquired entities.
- Pension Plan Volatility: Adverse financial market conditions can negatively impact the value of IBM’s pension trust assets and increase estimated pension liabilities, potentially requiring incremental funding that affects financial flexibility.
- Critical Supplier Reliance: Certain IBM businesses rely on a limited number of suppliers, including for server processor technology; failure of these suppliers to deliver components in a timely or secure manner could prevent IBM from bringing products to market.
- Open Source Dependency: IBM utilizes third-party open source software that lacks warranties or indemnification; if this code is no longer maintained by the community, IBM may be unable to enhance its own technologies or meet customer requirements.
3. Regulatory/Legal Risks
- Global Regulatory Compliance: Operating in over 175 countries subjects IBM to a complex web of laws, including data privacy requirements, AI and cloud regulations, data localization, and anti-corruption statutes.
- Tax Examinations: IBM is subject to continuous examination of its income tax returns by the IRS and other global tax authorities, with outcomes that could adversely affect IBM’s provision for income taxes and cash tax liability.
- Government Contracting: Agreements with governmental entities are subject to funding approvals and specific termination provisions; IBM faces the risk of debarment or civil and criminal fines, which would negatively impact financial results.
- Environmental Liability: IBM is subject to federal, state, and foreign environmental laws, including the U.S. Superfund law, and could incur substantial costs related to cleanup, fines, or third-party claims for property damage.
4. Financial Impact Map
Economic Downturn → Revenue and Profit → General economic conditions or shifts in client buying patterns directly impact these line items. Innovation Failure → Market Share and Profit Margins → Inability to scale disruptive technologies or attract a developer ecosystem threatens these metrics. Currency Fluctuations → Revenue and Costs → Approximately 60% of revenue is derived outside the U.S., making results sensitive to the relative value of non-U.S. currencies. Pension Plan Volatility → Financial Flexibility and Liquidity → Market downturns may require incremental funding, impacting cash reserves. Cybersecurity Incidents → Consolidated Net Income → Costs of responding to incidents, remediation, and potential regulatory fines or loss of customers can impact earnings.
Recent Filings
| Form | Filed | Period |
|---|---|---|
| 14A | Mar 2026 | — |
| 10-K | Feb 2026 | Dec 2025 |
| 8-K | Jan 2026 | — |
| 10-Q | Oct 2025 | Sep 2025 |
AI-extracted key facts from press releases and SEC filings. Significance 1–10.
IBM Launches Sovereign Core AI Platform, Expands Quantum and Aramco Partnerships
- ▸Launched Sovereign Core platform for enterprise AI data control and compliance
- ▸Simulated largest biologically meaningful molecule on quantum hardware with Cleveland Clinic and RIKEN
- ▸Announced AI and automation collaboration with Aramco for industrial operations
- ▸Shares trading 31.1% below estimated fair value per Simply Wall St
- ▸Current net income margin of 15.6% exceeds IT industry average of 7.6%
AIDX FY25 revenue $2.0M +17% YoY, net loss narrows 33% to $3.7M
- ▸FY25 revenue $2.0M, up 17% YoY
- ▸Gross margin expanded 900 bps to 29.6%
- ▸Operating expenses decreased 35% to $3.9M
- ▸Net loss improved 33% to $3.7M
- ▸Secured $5M private placement with up to $40M potential capital
IBM CEO Krishna Targets Further AI and Hybrid Cloud Acquisitions Amid Favorable Regulatory Climate
- ▸CEO Arvind Krishna signals intent to pursue more AI and hybrid cloud acquisitions
- ▸Regulatory environment cited as more favorable for faster transaction completion
- ▸Middle East conflict causing disruptions for 20% of regional staff
- ▸Consulting division facing recent headwinds with growth expected in 2H 2026
- ▸Recent acquisition of Confluent Inc. completed in under four months
IBM Consulting Q4 revenue $5.35B, up 3.5% YoY on enterprise AI demand
- ▸Q4 Consulting revenue $5.35B, up from $5.17B YoY
- ▸Consulting segment profit $658M, up from $606M
- ▸Consulting operating margin 12.3%, up from 11.7% YoY
- ▸Integrated Microsoft Copilot into IBM Consulting Advantage platform
- ▸Partnered with NVIDIA to integrate GPU-native tech with watsonx suite
IBM CEO cites friendlier regulatory environment following $11B Confluent acquisition clearance
- ▸Acquired Confluent for approximately $11 billion
- ▸Regulatory clearance for Confluent deal achieved in under four months
- ▸2025 free cash flow totaled $14.7 billion
- ▸Generative AI book of business reached $12.5 billion cumulative
- ▸New collaboration with NVIDIA delivers 5x speed improvement for enterprise AI
Vercel Appoints HashiCorp Co-Founder Mitchell Hashimoto to Board of Directors
- ▸Mitchell Hashimoto joins Vercel board of directors
- ▸Hashimoto co-founded HashiCorp, acquired by IBM for $6.4B in 2024
- ▸Vercel reports $340M GAAP revenue run-rate with 84% YoY growth
- ▸Vercel recently completed $300M Series F at $9.3B valuation
- ▸Hashimoto is creator of industry-standard tools Terraform and Vagrant
IBM completes $11B acquisition of Confluent to bolster real-time AI data capabilities
- ▸Acquired Confluent for $31 per share in cash
- ▸Transaction represents approximately $11 billion enterprise value
- ▸Integration targets real-time data streaming for watsonx.data and IBM Z
- ▸Enables AI models to operate with up-to-date context across hybrid environments
- ▸Supports event-driven operations for automated AI workflows
IBM completes $11B acquisition of Confluent at $31 per share
- ▸Acquisition price $31 per share in cash
- ▸Total enterprise value approximately $11 billion
- ▸Acquired all issued and outstanding common shares of Confluent
- ▸Integration aims to enable real-time data movement for AI models
- ▸Confluent technology to serve as foundation for IBM's live data AI operating model
IBM completes $11B acquisition of Confluent to bolster enterprise AI data streaming
- ▸Acquisition value $11 billion in cash
- ▸Purchase price $31 per share for all outstanding Confluent common stock
- ▸Integration targets IBM watsonx.data suite and IBM Z mainframe infrastructure
- ▸Confluent platform serves over 6,500 enterprise customers globally
- ▸Deal aims to enable real-time data streaming for AI and automation workflows
IBM completes $11 billion acquisition of data streaming platform Confluent
- ▸Acquisition valued at $11 billion
- ▸Integration focuses on data accessibility for AI agents
- ▸Strategic move to bolster enterprise AI capabilities
- ▸CEO Arvind Krishna dismisses AI-related business risks
- ▸Confluent platform provides real-time data streaming infrastructure