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Armonk, New York-based International Business Machines Corporation (IBM) operates as an IT solutions company, providing integrated solutions and services worldwide. Valued at $233.3 billion by market cap, IBM operates through the Consulting, Software, Infrastructure, and Financing segments.
The IT giant has significantly outperformed the broader market over the past year. IBM stock has soared 37.3% over the past 52 weeks and 14.8% on a YTD basis, outpacing the S&P 500 Index’s ($SPX) 20.6% gains over the past year and 2.5% surge in 2025.
Zooming in further, IBM has also outpaced the sector-focused Technology Select Sector SPDR Fund’s (XLK) 13.9% returns over the past year and a marginal 13 basis point gain in 2025.
IBM’s stock prices soared nearly 13% in the trading session after the release of its mixed Q4 results on Jan. 29. Driven by the strong demand for its cloud and AI solutions, IBM’s software segment’s revenues increased 10.4% year-over-year to $7.9 billion. However, its other three segments observed a notable drop in revenues, which led to its overall total revenues growing by a modest 99 basis points compared to the year-ago quarter reaching $17.6 billion, which managed to surpass the Street’s expectations by a small margin. Meanwhile, the company observed a significant contraction in pretax margins due to higher spending on SG&A and other operating expenses leading to a 12.1% decline in pre-tax income dropping to $3.3 billion.
For the current fiscal 2025, ending in December, IBM is expected to report a modest 4.1% year-over-year growth in non-GAAP earnings to $10.75 per share. On a positive note, the company has a strong earnings surprise history. It has surpassed analysts’ bottom-line estimates in each of the past four quarters. Its non-GAAP EPS of $3.92 for the last reported quarter surpassed the Street’s expectations by 5.1%.
Among the 17 analysts covering IBM, the consensus rating is a “Moderate Buy.” That’s based on 5 “Strong Buy,” one “Moderate Buy,” nine “Hold,” and two “Strong Sell” ratings.
This configuration is slightly more bullish than a month ago when four analysts gave “Strong Buy” recommendations.
On Jan. 30, BMO Capital analyst Keith Bachman maintained a “Hold” rating on IBM while setting a price target of $280.
As of writing, IBM is trading above its mean price target of $243.94 and its street-high target of $300 indicates an 18.9% upside potential from current price levels.
