International Business Machines Corporation IBM
IBM remains a hold as strong FY2025 fundamentals — revenue of $67.5B (+7.6% YoY), EPS of $11.17 (+73.7% YoY), and an 18.5% operating margin — are now overshadowed by an active securities fraud investigation announced August 28, 2026 and unresolved questions about the infrastructure-segment shortfall that triggered the prior sell-off. The stock at $235.59 trades below both its 50-day ($243.77) and 200-day ($264.17) moving averages, yet valuation is not distressed at a P/E of 20.6 (roughly in line with the peer median of 20.8) and a P/S of 3.2 (32.7% below the peer median), while smart money improved to a score of 0.20 as of Q2 2026 from -0.11 the prior quarter.
The combination of genuine fundamental momentum and material unquantified legal/operational risk keeps the position neutral pending clarity.
What could go wrong
- Securities fraud investigation. A law firm announced an investigation into IBM for potentially misleading investors on August 28, 2026, following a significant stock drop; outcome and scope are unknown.
- Infrastructure segment deterioration. The prior verdict cited a Q2 2026 Z-systems infrastructure shortfall that caused a ~25% single-day decline; no updated quarterly data is available to confirm whether the issue is contained.
- Technical breakdown persists. Stock at $235.59 sits below both the 50-day MA ($243.77) and 200-day MA ($264.17), indicating sustained downtrend despite a neutral RSI of 50.1.
- Elevated leverage. Total debt of $67.2B against stockholders' equity of $32.6B as of FY2025 limits financial flexibility if the infrastructure shortfall persists.
What would change my mind
Where this comes from: FMP annual fundamentals FY2025 + derived_metrics · FMP annual fundamentals FY2025 + derived_metrics · derived_metrics FY2025 · technicals as of 2026-08-28. Orin's read on IBM; not advice.
Twelve months actual closes to 2026-09-23 · actual filings
50-day average 200-day average · volume below
On file
All IBM filingsLargest holders · 13F Q2 2026
Money flow| Filer | Position | Of fund |
|---|---|---|
| Vanguard Capital Management | $17.3B | 0.4% of fund |
| State Street | $15.8B | 0.5% of fund |
| Vanguard Portfolio Management | $8.0B | 0.4% of fund |
| Geode Capital Management | $6.6B | 0.4% of fund |
| Morgan Stanley | $4.9B | 0.3% of fund |
| Capital World Investors | $4.6B | 0.5% of fund |
152 filers · quarter ended Q2 2026 · positions, not flows
Insiders, last 24 months: 207 Form 4 filings, net $10.1M. Of the 50 on hand, 2 were open-market purchases and 1 a sale— the rest are grants, option exercises and tax withholding.
Ask Orin about IBM
Orin answers questions about IBM from its filings, transcripts and numbers — with the source behind every claim. Your own desk starts with 3 free days, card required.
Start 3 free days →Where it trades
| Metric | Now | Own median | Sector |
|---|---|---|---|
| P/E | 20.3× | 26.1× | 53.3× |
| EV/EBITDA | 17.1× | 19.1× | — |
| P/S | 3.17× | 2.41× | — |
| P/B | 6.4× | 6.6× | — |
Its P/E sits 20th percentile of its own last 5 years (−0.71σ from its own mean).
6.4%
free-cash-flow growth every year for 10 years, discounted at 10%, is what today’s price implies — starting from $12.1B of trailing free cash flow. It is an assumption the market is making, not a forecast Orin is making.
What Wall Street published
$257
$175 – $350 · +11% against today's price
- 24 buy or overweight
- 22 hold
- 5 underweight or sell
The analysts’ consensus and their own ratings, not Orin’s. A target is a twelve-month opinion published by the firm that wrote it.
Against the companies it is compared to
| Company | Market cap | P/E | EV/EBITDA | Gross | Net | ROE |
|---|---|---|---|---|---|---|
| IBMInternational Business Machines Corporation | $219B | 20.3× | 17.1× | 58.4% | 15.5% | 34% |
| ACNAccenture plc | $112B | 14.5× | 8.7× | 32.0% | 10.7% | 25% |
| CRMSalesforce, Inc. | $195B | 21.6× | 14.4× | 77.3% | 22.0% | 20% |
| CSCOCisco Systems, Inc. | $419B | 31.7× | 22.1× | 64.5% | 21.0% | 27% |
| EPAMEPAM Systems, Inc. | $6B | 14.9× | 7.5× | 28.3% | 7.2% | 11% |
| MUMicron Technology, Inc. | $1.21T | 23.9× | 17.4× | 72.6% | 55.9% | 71% |
The median is of the 5 peers listed above and nothing else — check it against the column. This company trades 5.9% below it. The peer set is the vendor’s, so a company can appear here that a person would not have chosen.
What it has traded at
What its sector has traded at
Two scales, drawn separately on purpose: a sector median and one company’s multiple are not the same number and putting them on one axis invites a comparison neither series supports.
Discounted cash flow
| Model | Fair value | Against | Computed |
|---|---|---|---|
| Standard DCF | $394 | $274.63 · +43% | 2026-06-10 |
| Levered DCF | $419 | $274.63 · +53% | 2026-06-10 |
The vendor’s intrinsic-value models. Treat them as a low-growth anchor — for a fast grower the market routinely pays well above a DCF. These were computed against the price in the “against” column, not today’s.
Every estimate on one scale
The vertical rule is the current price. Ranges and point estimates are the backend’s, published as they were calculated; an arrow means the estimate sits beyond this scale, and its number is on the right.