IBM Exceeds Q4 Revenue and Profit Estimates Driven by AI Demand
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Jan 28 2026
0mins
Source: Newsfilter
- Performance Beat: IBM reported Q4 revenue of $19.69 billion, surpassing analyst expectations of $19.23 billion, indicating strong performance amid surging demand for artificial intelligence.
- Profitability Improvement: Adjusted earnings per share reached $4.52, exceeding the forecast of $4.32, reflecting the company's sustained profitability in software services.
- Software Segment Growth: The software segment generated sales of $9.03 billion, beating the estimate of $8.77 billion, with the Automation and Data units growing 18% and 22% respectively, showcasing success in AI technology applications.
- Cloud Business Challenges: Despite overall strong performance, IBM's hybrid cloud unit growth slowed to 10%, impacted by the longest U.S. government shutdown in history, which is expected to exert some short-term pressure on the business.
Trade with 70% Backtested Accuracy
Stop guessing "Should I Buy IBM?" and start using high-conviction signals backed by rigorous historical data.
Sign up today to access powerful investing tools and make smarter, data-driven decisions.
Analyst Views on IBM
Wall Street analysts forecast IBM stock price to rise
16 Analyst Rating
11 Buy
4 Hold
1 Sell
Moderate Buy
Current: 260.790
Low
210.00
Averages
315.80
High
375.00
Current: 260.790
Low
210.00
Averages
315.80
High
375.00
About IBM
International Business Machines Corporation is a provider of global hybrid cloud and artificial intelligence (AI) and consulting expertise. The Company’s segments include Software, Consulting, Infrastructure and Financing. The Software segment includes hybrid cloud and AI platforms, which allow clients to realize their digital and AI transformations across the applications, data, and environments in which they operate. The Consulting segment focuses on integrating skills on strategy, experience, technology and operations by domain and industry. The Infrastructure segment is focused on the hybrid cloud infrastructure market, providing on-premises and cloud-based server and storage solutions. In addition, it offers a portfolio of life-cycle services for hybrid cloud infrastructure deployment. The Financing segment provides client and commercial financing, facilitating its clients’ acquisition of hardware, software and services. It helps clients in more than 175 countries.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
IBM Targets $15.7B Free Cash Flow by 2026, Analysts See Upside
- Free Cash Flow Outlook: During its latest earnings call, IBM guided for a free cash flow target of $15.7 billion by 2026, with analysts believing this target is not only achievable but potentially beatable.
- Revenue Growth Drivers: Evercore analysts project that IBM's net income, starting from last year's $14.7 billion, will grow by approximately $800-900 million, while deferred revenue from software growth is expected to add around $200-300 million, further boosting free cash flow.
- Stock-Based Compensation Impact: With the growth in software business, stock-based compensation is anticipated to contribute about $200-300 million; although this is not an add-back for IBM's adjusted net income, it will positively impact free cash flow.
- Acquisition Impact: Evercore noted that the $11 billion proposed acquisition of Confluent has already been reflected in the year-over-year change to net income, with the deal expected to close by mid-year, further strengthening IBM's market position.
See More
Investment Opportunities in High-Quality Stocks
- Broadcom's Growth Potential: In fiscal 2025, Broadcom's AI chip sales surged by 65% to $20 billion, accounting for 31% of its total revenue, indicating that its strong performance in AI will offset slower growth in non-AI chips and infrastructure software, thereby enhancing overall company performance.
- Optimistic Future Outlook: Analysts expect Broadcom's revenue and adjusted EPS to grow by 52% and 51%, respectively, in fiscal 2026, which presents an attractive growth potential for a stock currently trading at 32 times forward earnings, likely appealing to long-term investors.
- IBM's Transformation Journey: Since Arvind Krishna became CEO in 2020, IBM has successfully achieved revenue and adjusted EPS growth of 8% and 12%, respectively, in fiscal 2025 by spinning off its low-growth managed infrastructure services segment and expanding its hybrid cloud and AI businesses, demonstrating the effectiveness of its business model.
- Market Competitive Strategy: IBM's use of acquired Red Hat to launch open-source applications that facilitate data flow between private and public clouds has attracted large enterprises that are not yet ready to fully migrate to public cloud, and this flexible
See More
Investment Outlook for Quantum Computing Companies
- IonQ Acquisition Strategy: IonQ is acquiring SkyWater Technology, a semiconductor foundry, to gain end-to-end control over quantum chip production, which will enhance its competitive edge and market share in the quantum computing sector.
- Significant Sales Growth: IonQ reported $39.9 million in sales for Q3, a 222% year-over-year increase, with projected revenues for 2025 expected to reach between $106 million and $110 million, demonstrating strong market demand and effective technology application.
- IBM Quantum Milestones: IBM aims to achieve quantum advantage by the end of 2026 and plans to deliver a fault-tolerant quantum computer by 2029, which will significantly enhance its market position and drive broader adoption of quantum computing technology.
- Financial Health: Despite IonQ's Q3 operating loss of $168.8 million, its debt-free status and $3.5 billion in cash and investments provide robust support for future growth, indicating strong long-term potential in the quantum computing landscape.
See More
Investment Opportunities in Quantum Computing Stocks
- IonQ Stock Decline: IonQ's stock fell 24% in 2026 from its 52-week high of $84.64 last October, indicating a cooling investor enthusiasm for quantum computing, necessitating careful evaluation of its future performance.
- IBM's Quantum Advantage Goal: IBM aims to achieve quantum advantage by the end of 2026, which is expected to significantly enhance its competitive position in the quantum computing space; despite an 11% stock drop in 2026, the company remains profitable with a net income of $10.6 billion in 2025.
- IonQ's Acquisition Strategy: IonQ's acquisition of SkyWater Technology and others aims for end-to-end control over quantum chip production, with Q3 2023 sales reaching $39.9 million, a 222% year-over-year increase, demonstrating the effectiveness of its technology and growing market demand.
- IBM's Cash Flow Growth: IBM's free cash flow reached $14.7 billion in 2025, supporting a 2.6% dividend yield; despite a stock price decline, its price-to-earnings ratio is near a yearly low, indicating a good opportunity to buy IBM shares.
See More
Accenture Mandates AI Tool Usage for Leadership Promotions
- Promotion Requirements: Accenture has informed senior staff that regular use of AI tools is a prerequisite for leadership promotions, aiming to enhance the company's competitiveness in the AI sector and ensure employee skills align with market demands.
- Employee Reskilling Initiative: CEO Julie Sweet stated that 550,000 employees have been reskilled in generative AI fundamentals, highlighting the company's commitment to skill enhancement and laying the groundwork for future business transformation.
- Global Employee Impact: While the policy applies to most employees, those in 12 European countries and the division handling U.S. government contracts are exempt, reflecting the company's flexibility and adaptability on a global scale.
- Strategic Partnerships: Accenture has recently partnered with companies like OpenAI and Anthropic to provide AI tool training for tens of thousands of employees, further solidifying its leadership position in AI technology application.
See More
Palantir Technologies Stock Rises 1.77% Following Upgrade and AI Partnerships
- Stock Price Increase: Palantir Technologies' stock rose by 1.77% to close at $135.38, primarily driven by a Mizuho upgrade and new AI partnerships, reflecting market confidence in the company's future growth prospects.
- Surge in Trading Volume: Trading volume reached 58.4 million shares, approximately 29% above the three-month average, indicating increased investor interest in Palantir and potentially signaling future market activity.
- Rating Upgrade: Mizuho upgraded Palantir's stock to a buy rating with a price target of $195, highlighting its unique revenue growth and margin expansion, which indicates market recognition of its long-term potential.
- Headquarters Relocation Impact: Palantir's move from Denver to Miami may affect its tax expenses and talent acquisition, further strengthening its position in a competitive market landscape.
See More
IBM Targets $15.7B Free Cash Flow by 2026, Analysts See Upside
- Free Cash Flow Outlook: During its latest earnings call, IBM guided for a free cash flow target of $15.7 billion by 2026, with analysts believing this target is not only achievable but potentially beatable.
- Revenue Growth Drivers: Evercore analysts project that IBM's net income, starting from last year's $14.7 billion, will grow by approximately $800-900 million, while deferred revenue from software growth is expected to add around $200-300 million, further boosting free cash flow.
- Stock-Based Compensation Impact: With the growth in software business, stock-based compensation is anticipated to contribute about $200-300 million; although this is not an add-back for IBM's adjusted net income, it will positively impact free cash flow.
- Acquisition Impact: Evercore noted that the $11 billion proposed acquisition of Confluent has already been reflected in the year-over-year change to net income, with the deal expected to close by mid-year, further strengthening IBM's market position.
See More
Investment Opportunities in High-Quality Stocks
- Broadcom's Growth Potential: In fiscal 2025, Broadcom's AI chip sales surged by 65% to $20 billion, accounting for 31% of its total revenue, indicating that its strong performance in AI will offset slower growth in non-AI chips and infrastructure software, thereby enhancing overall company performance.
- Optimistic Future Outlook: Analysts expect Broadcom's revenue and adjusted EPS to grow by 52% and 51%, respectively, in fiscal 2026, which presents an attractive growth potential for a stock currently trading at 32 times forward earnings, likely appealing to long-term investors.
- IBM's Transformation Journey: Since Arvind Krishna became CEO in 2020, IBM has successfully achieved revenue and adjusted EPS growth of 8% and 12%, respectively, in fiscal 2025 by spinning off its low-growth managed infrastructure services segment and expanding its hybrid cloud and AI businesses, demonstrating the effectiveness of its business model.
- Market Competitive Strategy: IBM's use of acquired Red Hat to launch open-source applications that facilitate data flow between private and public clouds has attracted large enterprises that are not yet ready to fully migrate to public cloud, and this flexible
See More
Investment Outlook for Quantum Computing Companies
- IonQ Acquisition Strategy: IonQ is acquiring SkyWater Technology, a semiconductor foundry, to gain end-to-end control over quantum chip production, which will enhance its competitive edge and market share in the quantum computing sector.
- Significant Sales Growth: IonQ reported $39.9 million in sales for Q3, a 222% year-over-year increase, with projected revenues for 2025 expected to reach between $106 million and $110 million, demonstrating strong market demand and effective technology application.
- IBM Quantum Milestones: IBM aims to achieve quantum advantage by the end of 2026 and plans to deliver a fault-tolerant quantum computer by 2029, which will significantly enhance its market position and drive broader adoption of quantum computing technology.
- Financial Health: Despite IonQ's Q3 operating loss of $168.8 million, its debt-free status and $3.5 billion in cash and investments provide robust support for future growth, indicating strong long-term potential in the quantum computing landscape.
See More
Investment Opportunities in Quantum Computing Stocks
- IonQ Stock Decline: IonQ's stock fell 24% in 2026 from its 52-week high of $84.64 last October, indicating a cooling investor enthusiasm for quantum computing, necessitating careful evaluation of its future performance.
- IBM's Quantum Advantage Goal: IBM aims to achieve quantum advantage by the end of 2026, which is expected to significantly enhance its competitive position in the quantum computing space; despite an 11% stock drop in 2026, the company remains profitable with a net income of $10.6 billion in 2025.
- IonQ's Acquisition Strategy: IonQ's acquisition of SkyWater Technology and others aims for end-to-end control over quantum chip production, with Q3 2023 sales reaching $39.9 million, a 222% year-over-year increase, demonstrating the effectiveness of its technology and growing market demand.
- IBM's Cash Flow Growth: IBM's free cash flow reached $14.7 billion in 2025, supporting a 2.6% dividend yield; despite a stock price decline, its price-to-earnings ratio is near a yearly low, indicating a good opportunity to buy IBM shares.
See More
Accenture Mandates AI Tool Usage for Leadership Promotions
- Promotion Requirements: Accenture has informed senior staff that regular use of AI tools is a prerequisite for leadership promotions, aiming to enhance the company's competitiveness in the AI sector and ensure employee skills align with market demands.
- Employee Reskilling Initiative: CEO Julie Sweet stated that 550,000 employees have been reskilled in generative AI fundamentals, highlighting the company's commitment to skill enhancement and laying the groundwork for future business transformation.
- Global Employee Impact: While the policy applies to most employees, those in 12 European countries and the division handling U.S. government contracts are exempt, reflecting the company's flexibility and adaptability on a global scale.
- Strategic Partnerships: Accenture has recently partnered with companies like OpenAI and Anthropic to provide AI tool training for tens of thousands of employees, further solidifying its leadership position in AI technology application.
See More
Palantir Technologies Stock Rises 1.77% Following Upgrade and AI Partnerships
- Stock Price Increase: Palantir Technologies' stock rose by 1.77% to close at $135.38, primarily driven by a Mizuho upgrade and new AI partnerships, reflecting market confidence in the company's future growth prospects.
- Surge in Trading Volume: Trading volume reached 58.4 million shares, approximately 29% above the three-month average, indicating increased investor interest in Palantir and potentially signaling future market activity.
- Rating Upgrade: Mizuho upgraded Palantir's stock to a buy rating with a price target of $195, highlighting its unique revenue growth and margin expansion, which indicates market recognition of its long-term potential.
- Headquarters Relocation Impact: Palantir's move from Denver to Miami may affect its tax expenses and talent acquisition, further strengthening its position in a competitive market landscape.
See More
