# International Business Machines (IBM.US)

Canonical: https://gigainvestors.com/s/IBM

Analysis as of: 2026-10-16T07:29:14.221Z. Financial observations: FY1996–FY2026.

Listing currency: USD. Reporting currency: USD.

## Verdict

Not a wonderful business

Quality tests for Buy: not passed (profit record: pass; earnings resilience is evidence only). Published buy qualification: no.

Share price: $234.12 per share; close as of 2026-10-15.

Estimated value: low $136.48 per share, central $154.31 per share, high $178.05 per share. Buy at or below the central value $154.31 per share. Valuation as of 2026-10-16T07:29:14.221Z; scenarios are not confidence intervals.

Expected annual return: 7.5% at the stated quote. About 7.5% a year at today's price (required return 10.0%). required return 10.0% a year (10% floor; US 10-year bond 5.1% + 4 points).

## Checklist

### understandable: pass

- 3 revenue declines in the last 10 years (informational)

- Financial history: 10 years

- Years with declining revenue: 3

- Years with a net loss: 0

- Operating margin variation: 0.19×

Chart: Operating margin; fiscal year observations.

- FY2017: 0.17×

- FY2018: 0.17×

- FY2019: 0.13×

- FY2020: 0.09×

- FY2021: 0.12×

- FY2022: 0.14×

- FY2023: 0.12×

- FY2024: 0.16×

- FY2025: 0.18×

- LTM to Jun 2026: 0.17×

### moat: pass

- ROIC, median of available years: 70.9%

- ROIC, second-lowest year: 43.3%

- Typical minus recent gross margin: -2.3 pp

- Typical gross margin (annual median): 54.3%

- Recent gross margin (lower of latest and 3-year median): 56.7%

- Years with nonpositive capital: 0

- Capital spending / revenue: 4.1%

- ROIC including acquisitions, ten-year median: 14.3%

Chart: ROIC excluding acquisitions; fiscal year observations.

- FY2016: 90.1%

- FY2017: 56.8%

- FY2018: 70.9%

- FY2019: 31.4%

- FY2020: 43.3%

- FY2021: 59.7%

- FY2022: 72.5%

- FY2023: 73.4%

- FY2024: 96.8%

- FY2025: 70.9%

### economics: fail

- incremental invested capital return below threshold

- Owner earnings / net income, 5-yr: 1.52×

- Cash conversion uses consolidated totals: No

- Owner earnings, five-year total: $48B

- Net income, five-year total: $32B

- Return on incremental invested capital: 0.0%

- Working capital / revenue, annual change: -2.2 pp

- Working capital / revenue, change between three-year averages: -13.4 pp

- Working capital / revenue, final three-year average: 18.9%

Chart: Annual owner cash / profit; fiscal year observations.

- FY2021: 1.70×

- FY2022: 2.79×

- FY2023: 1.33×

- FY2024: 1.50×

- FY2025: 1.37×

### management: fail

- Historical market-dollar context (not the management verdict): 2016 to 2025 (9 years)

- buybacks leaned toward cheaper years (informational)

- ROIC first 3 years vs last 3 years: 70.9% vs 73.4%

- Per-share earnings: 11.84 to 8.14 (three-year endpoint medians)

- per-share value declined or ends nonpositive

- Management verdict uses per-share economic progress: Yes

- Ordinary dilution, 10-year annual growth: -0.8%

- Ordinary dilution, 5-year annual growth: 1.1%

- Market cap gain: $121B

- Cumulative retained earnings: $2.9B

- Diluted shares, 10-year annual growth: -0.8%

- Diluted shares, 5-year annual growth: 1.1%

- $1 test, starting fiscal year: FY2016

- $1 test, ending fiscal year: FY2025

- Per-share value growth: -4.6%

- Per-share value change: -$3.70

- Per-share value, starting three-year median: $11.84

- Per-share value, ending three-year median: $8.14

- Buybacks concentrated in cheaper years (correlation): 0.33

- Average buyback yield: 1.3%

- Buyback history: 10 years

- Debt-funded buybacks: No

- Acquisition spending: $46B

- Cumulative net income, 10 years: $73B

- ROIC, first three-year median: 70.9%

- ROIC, last three-year median: 73.4%

Chart: Earnings per share; fiscal year observations.

- FY2016: $11.84

- FY2017: $5.87

- FY2018: $9.11

- FY2019: $10.56

- FY2020: $6.23

- FY2021: $6.35

- FY2022: $1.80

- FY2023: $8.14

- FY2024: $6.43

- FY2025: $11.17

### accounting: pass

- Sloan accruals: -1.7%

- Receivables to sales index (DSRI): 1.17×

- Restructuring years, last five: 0

- Stock compensation / operating cash flow: 13.0%

- Earnings backed by cash: Yes

- Operating cash / earnings: 1.25×

- Accounting red flags: 0

- Goodwill and intangibles / equity: 2.42×

Chart: Sloan accruals; fiscal year observations.

- FY2016: -4.4%

- FY2017: -8.8%

- FY2018: -5.3%

- FY2019: -3.5%

- FY2020: -8.1%

- FY2021: -5.3%

- FY2022: -6.9%

- FY2023: -4.4%

- FY2024: -5.4%

- FY2025: -1.7%

## Holders

- [David Hoeft](https://gigainvestors.com/DAC): tracked 13F investor; follow the investor page for holding quarter and amounts.

- [Thomas Graham Kahn](https://gigainvestors.com/KB): tracked 13F investor; follow the investor page for holding quarter and amounts.

- [David Katz](https://gigainvestors.com/MAVFX): tracked 13F investor; follow the investor page for holding quarter and amounts.

- [Andrew Adams](https://gigainvestors.com/MPF): tracked 13F investor; follow the investor page for holding quarter and amounts.

- [Arnold Van Den Berg](https://gigainvestors.com/VAN): tracked 13F investor; follow the investor page for holding quarter and amounts.

## Price story

Down 24% since Nov 2025 · "IBM forecasts preliminary Q2 revenue below estimates as spending shifts to AI" (finance.yahoo.com, Jul 2026) · sales +2.3%

Story as of 2026-10-16T09:58:55.683Z; price observation 2026-10-15.

Price needs cash profits to grow 6.3% a year for ten years

- 2025-07-28: IBM Stock Slips on Slower Software Growth Despite Q2 Beat ([finance.yahoo.com](https://finance.yahoo.com/news/ibm-stock-slips-slower-software-184403566.html))

- 2025-10-07: IBM Rallies To Record Highs After Striking AI Partnership With Anthropic ([finance.yahoo.com](https://finance.yahoo.com/m/5ee8f27c-9c49-3811-8223-3c30b2bb2699/ibm-rallies-to-record-highs.html))

- 2026-02-23: IBM stock tumbles 10% after Anthropic launches COBOL AI tool ([finance.yahoo.com](https://finance.yahoo.com/news/ibm-stock-tumbles-10-anthropic-194042677.html))

- 2026-04-23: IBM Q1 2026 earnings beat estimates but stock falls on guidance ([finance.yahoo.com](https://finance.yahoo.com/markets/stocks/articles/ibm-q1-2026-earnings-beat-132710855.html))

- 2026-05-30: International Business Machines (IBM) Unveils $15B Investments, Surges 12.7% ([finance.yahoo.com](https://finance.yahoo.com/markets/stocks/articles/international-business-machines-ibm-unveils-054341591.html))

- 2026-07-15: IBM's AI Spending Warning Triggers Historic Stock Selloff ([finance.yahoo.com](https://finance.yahoo.com/technology/ai/articles/ibms-ai-spending-warning-triggers-120600295.html))

### Sales · FY2025–2026

sales +2.3%; source https://www.sec.gov/Archives/edgar/data/51143/000005114326000010/ibm-20251231.htm; observed 2026-02-24.

- FY2017: $79B 

- FY2018: $80B 

- FY2019: $58B 

- FY2020: $74B 

- FY2021: $57B 

- FY2022: $61B 

- FY2023: $62B 

- FY2024: $63B 

- FY2025: $68B 

- FY2026: $69B 

### Gross margin · FY2025

gross margin 58.2%; source https://www.sec.gov/Archives/edgar/data/51143/000005114326000010/ibm-20251231.htm; observed 2026-02-24.

- FY2016: 48.2% 

- FY2017: 46.7% 

- FY2018: 46.4% 

- FY2019: 54.6% 

- FY2020: 48.3% 

- FY2021: 54.9% 

- FY2022: 54.0% 

- FY2023: 55.4% 

- FY2024: 56.7% 

- FY2025: 58.2% 

## Owner memo

Memo as of 2026-10-16T08:06:05.509Z.

### How it makes money

Operates in information technology services; annual sales are USD 67.5 billion.

- Source: https://www.sec.gov/Archives/edgar/data/51143/000005114326000010/ibm-20251231.htm (filed 2026-02-24); FY2025: revenue 67536000000; grossProfit 39297000000; margin = grossProfit / revenue.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16); IBM.US: 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 

### Why customers stay

Margins ranged from 55.4% to 58.2% during 2023–25; it earns 70.9% on its capital.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-24); FY2023: grossProfit / revenue = 55.4%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-24); FY2024: grossProfit / revenue = 56.7%.

- Source: https://www.sec.gov/Archives/edgar/data/51143/000005114326000010/ibm-20251231.htm (filed 2026-02-24); FY2025: grossProfit / revenue = 58.2%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-24); 10-year return on capital observations [[2016,0.9014873415627445],[2017,0.5675028241079142],[2018,0.708562710538744],[2019,0.31433647184597757],[2020,0.43323908262645305],[2021,0.5971881877974086],[2022,0.7252883762200533],[2023,0.7342237184648042],[2024,0.9680953296175283],[2025,0.7092085840808448]]; median 0.7088856473097944. ROIC follows the displayed moat series; financial companies use return on tangible equity.

### Can it raise prices

Kept about a 54% gross margin through 2022 cost inflation.

- Source: https://www.sec.gov/Archives/edgar/data/51143/000005114326000010/ibm-20251231.htm (filed 2026-02-24); Gross margin observations: [[2021,0.5490052483827658],[2022,0.5400132165868164],[2023,0.5544778532169414]]; range within 2 percentage points.

### Where the cash goes

Paid dividends in 10 of 10 years; bought back USD 1 billion of shares.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-24); FY2016: growth capex 0; upkeep 4150000000; owner earnings 12103000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-24); FY2017: growth capex 0; upkeep 3773000000; owner earnings 6521000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-24); FY2018: growth capex 0; upkeep 3964000000; owner earnings 9244000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-24); FY2019: growth capex 0; upkeep 2907000000; owner earnings 12583000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-24); FY2020: growth capex 0; upkeep 3042000000; owner earnings 9243000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-24); FY2021: growth capex 0; upkeep 2381000000; owner earnings 9778000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-24); FY2022: growth capex 0; upkeep 1860000000; owner earnings 4582000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-24); FY2023: growth capex 0; upkeep 1918000000; owner earnings 9979000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-24); FY2024: growth capex 0; upkeep 1685000000; owner earnings 9005000000. Growth capex / owner earnings = 0.

- Source: https://www.sec.gov/Archives/edgar/data/51143/000005114326000010/ibm-20251231.htm (filed 2026-02-24); FY2025: growth capex 0; upkeep 1091000000; owner earnings 14523000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-24); Dividend observations: [[2016,5256000000],[2017,5506000000],[2018,5666000000],[2019,5707000000],[2020,5797000000],[2021,5869000000],[2022,5948000000],[2023,6016000000],[2024,6147000000],[2025,6255000000]]. Zero only counted when supported by a complete cash-flow statement.

- Source: https://www.sec.gov/Archives/edgar/data/51143/000005114326000010/ibm-20251231.htm (filed 2026-02-24); FY2025: cash repurchases 1018000000 USD.

### Are managers owners

Insiders own 0.1% of the company.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16); IBM.US SharesStats.PercentInsiders = 0.105 percentage points; cache date 2026-10-16.

### What could break it

US import tariffs could raise product costs.

- Source: https://www.sec.gov/Archives/edgar/data/51143/000005114326000010/ibm-20251231.htm (filed 2026-02-24); nships amongst those countries. Further, as the company expands its customer base and the scope of its offerings, both within the U.S. and globally, it may be impacted by additional regulatory or other risks, including, compliance with U.S. and foreign data privacy requirements, outbound investment restrictions, AI and cloud regulations, data localization requirements, labor relations laws, enforcement of IP protection laws, laws relating to anti-corruption, anti-competition regulations, and import, export and trade restrictions. Further, international trade disputes could create uncertainty. Tariffs, international trade sanctions, and export controls on goods, technologies, inputs, and raw materials resulting from these disputes could affect the company’s ability to move goods and services across borders, or could impose added costs to those activities. Measures taken to date by the company to mitigate these impacts could be made less effective should trade sanctions, export controls, or tariffs change. In addition, any widespread outbreak of an illness, pandemic or other local or global health issue, natural disasters, climate change impacts, or uncertain political climates, international hostilities, or any terrorist activities, could adversely affect customer demand, the company’s operations and supply chain, and its ability to source and deliver products and services to its customers.

The Company May Not Meet Its Growth and Productivity Objectives: On an ongoing basis, IBM seeks to drive greater agility, productivity, flexibility and cost savings by continuously transforming with the use of automation, AI, agile processes and changes to the ways of working, while also enabling the scaling of resources, offerings and investments through the company’s globally integrated model across both emerging and more established markets. These various initiatives may not yield their intended gains in speed, quality, productivity and enablement of rapid scaling, which may impact the company’s competitiveness and its ability to meet its growth and productivity objectives.

Ineffective Internal Controls Could Impact the Company’s Business and Operating Results: The company’s internal control over financial reporting may not prevent or detect misstatements because of its inherent limitations, including the possibility of human error, failure or interruption of information technology systems, the circumvention or overriding of controls, or fraud. Even effective internal controls can provide only reasonable assurance with respect to the preparation and fair presentation of financial statements. If the company fails to maintain the adequacy of its internal controls, including any failure to implement required new or improved controls, or if the company experiences difficulties in their implementation, the company’s business and operating results could be harmed 

### What the price says

The price assumes cash profits grow 6.3% yearly over ten years; actual growth was 2%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-24); Ten-year compound average after fade. Initial solved rate 0.07776551786706432. Price 234.12; FX 1; discount 0.1; same standard ten-year fade to terminal 0.03. FY2015 owner earnings/share 12.543967129131072 → FY2025 15.308716377698017. Closing-price date 2026-10-15.

## Monthly share-price history (USD per share)

- 2016-11: $155.09 per share

- 2016-12: $158.69 per share

- 2017-01: $166.85 per share

- 2017-02: $171.91 per share

- 2017-03: $166.48 per share

- 2017-04: $153.24 per share

- 2017-05: $145.92 per share

- 2017-06: $147.07 per share

- 2017-07: $138.31 per share

- 2017-08: $136.74 per share

- 2017-09: $138.70 per share

- 2017-10: $147.28 per share

- 2017-11: $147.20 per share

- 2017-12: $146.67 per share

- 2018-01: $156.50 per share

- 2018-02: $148.98 per share

- 2018-03: $146.68 per share

- 2018-04: $138.59 per share

- 2018-05: $135.10 per share

- 2018-06: $133.56 per share

- 2018-07: $138.56 per share

- 2018-08: $140.04 per share

- 2018-09: $144.56 per share

- 2018-10: $110.35 per share

- 2018-11: $118.80 per share

- 2018-12: $108.67 per share

- 2019-01: $128.51 per share

- 2019-02: $132.06 per share

- 2019-03: $134.89 per share

- 2019-04: $134.10 per share

- 2019-05: $121.41 per share

- 2019-06: $131.84 per share

- 2019-07: $141.72 per share

- 2019-08: $129.57 per share

- 2019-09: $139.02 per share

- 2019-10: $127.85 per share

- 2019-11: $128.54 per share

- 2019-12: $128.15 per share

- 2020-01: $137.41 per share

- 2020-02: $124.43 per share

- 2020-03: $106.05 per share

- 2020-04: $120.04 per share

- 2020-05: $119.41 per share

- 2020-06: $115.46 per share

- 2020-07: $117.53 per share

- 2020-08: $117.89 per share

- 2020-09: $116.32 per share

- 2020-10: $106.75 per share

- 2020-11: $118.09 per share

- 2020-12: $120.34 per share

- 2021-01: $113.87 per share

- 2021-02: $113.70 per share

- 2021-03: $127.40 per share

- 2021-04: $135.64 per share

- 2021-05: $137.42 per share

- 2021-06: $140.14 per share

- 2021-07: $134.76 per share

- 2021-08: $134.17 per share

- 2021-09: $132.82 per share

- 2021-10: $119.60 per share

- 2021-11: $117.10 per share

- 2021-12: $133.66 per share

- 2022-01: $133.57 per share

- 2022-02: $122.51 per share

- 2022-03: $130.02 per share

- 2022-04: $132.21 per share

- 2022-05: $138.84 per share

- 2022-06: $141.19 per share

- 2022-07: $130.79 per share

- 2022-08: $128.45 per share

- 2022-09: $118.81 per share

- 2022-10: $138.29 per share

- 2022-11: $148.90 per share

- 2022-12: $140.89 per share

- 2023-01: $134.73 per share

- 2023-02: $129.30 per share

- 2023-03: $131.09 per share

- 2023-04: $126.41 per share

- 2023-05: $128.59 per share

- 2023-06: $133.81 per share

- 2023-07: $144.18 per share

- 2023-08: $146.83 per share

- 2023-09: $140.30 per share

- 2023-10: $144.64 per share

- 2023-11: $158.56 per share

- 2023-12: $163.55 per share

- 2024-01: $183.66 per share

- 2024-02: $185.03 per share

- 2024-03: $190.96 per share

- 2024-04: $166.20 per share

- 2024-05: $166.85 per share

- 2024-06: $172.95 per share

- 2024-07: $192.14 per share

- 2024-08: $202.13 per share

- 2024-09: $221.08 per share

- 2024-10: $206.72 per share

- 2024-11: $227.41 per share

- 2024-12: $219.83 per share

- 2025-01: $255.70 per share

- 2025-02: $252.44 per share

- 2025-03: $248.66 per share

- 2025-04: $241.82 per share

- 2025-05: $259.06 per share

- 2025-06: $294.78 per share

- 2025-07: $253.15 per share

- 2025-08: $243.49 per share

- 2025-09: $282.16 per share

- 2025-10: $307.41 per share

- 2025-11: $308.58 per share

- 2025-12: $296.21 per share

- 2026-01: $306.70 per share

- 2026-02: $240.21 per share

- 2026-03: $242.39 per share

- 2026-04: $230.98 per share

- 2026-05: $297.80 per share

- 2026-06: $281.21 per share

- 2026-07: $223.65 per share

- 2026-08: $233.87 per share

- 2026-09: $219.93 per share

- 2026-10: $230.78 per share

## Annual estimated value (USD per share)

- FY2016: low $144.32 per share, central $163.26 per share, high $188.48 per share

- FY2017: low $144.82 per share, central $163.24 per share, high $187.76 per share

- FY2018: low $131.47 per share, central $148.10 per share, high $170.24 per share

- FY2019: low $115.64 per share, central $130.39 per share, high $150.03 per share

- FY2020: low $126.45 per share, central $141.98 per share, high $162.67 per share

- FY2021: low $93.74 per share, central $105.74 per share, high $121.71 per share

- FY2022: low $99.30 per share, central $111.86 per share, high $128.57 per share

- FY2023: low $131.53 per share, central $147.84 per share, high $169.55 per share

- FY2024: low $119.26 per share, central $133.74 per share, high $153.01 per share

- FY2025: low $139.35 per share, central $156.66 per share, high $179.70 per share

Historical values use today's bond yield for every fiscal year

Historical values use today's FX rate into trading currency for every fiscal year

Historical values use current restated fundamentals and current commodity classification; they are not point-in-time estimates

Prior published observations retained from 2026-10-15T06:34:57.042Z where newer inputs omit a numeric field or fiscal period.

## Sources

[Original 10-K filing](https://www.sec.gov/Archives/edgar/data/51143/000005114326000010/ibm-20251231.htm); period 2025-12-31, filed 2026-02-24.

Estimates depend on assumptions and are not guarantees or investment advice. Underlying data remains subject to its source licenses; public reading does not grant bulk redistribution rights.