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Armonk, New York-based International Business Machines Corporation (IBM) is a global technology leader with a market cap of $270.6 billion. IBM delivers a broad portfolio of software, services, and hardware designed to drive digital transformation for businesses and is known for its cutting-edge work in artificial intelligence, cloud computing, and enterprise solutions. The company is scheduled to report its Q2 earnings after the market closes on Wednesday, July 23.
Ahead of the event, analysts predict IBM’s bottom line will improve 8.6% year over year to $2.64 per share. The company has consistently outpaced Wall Street’s EPS estimates in its last four quarterly reports.
For the current year, analysts expect IBM to report an EPS of $10.95, which is up 6% from $10.33 in fiscal 2024. Its EPS is projected to rise 6.5% annually to $11.66 in fiscal 2026.
IBM stock has soared 62.2% over the past year, outperforming the broader S&P 500 Index's ($SPX) 13% gains and the Technology Select Sector SPDR Fund's (XLK) 10.7% upstick over the same period.
IBM has outperformed the broader market over the past year, largely due to growing investor confidence in its leadership in quantum computing and its clear, ambitious roadmap toward fault-tolerant systems. The company aims to achieve true quantum advantage by 2026 and full-scale quantum error correction by 2029, with its modular chip rollout, from Nighthawk to Starling, highlighting steady technical progress.
However, IBM released its Q1 earnings on Apr. 23, and its shares dipped more than 6% in the following trading session due to decline in the infrastructure and consulting segments. It reported revenue of $14.5 billion, up marginally year over year, driven by strong growth in its software segment, particularly in hybrid cloud, automation, and data solutions. The company delivered adjusted EPS of $1.60, beating expectations with a 12.7% earnings surprise. IBM reaffirmed its full-year guidance, projecting around 5% constant-currency revenue growth and $13.5 billion in free cash flow.
The consensus opinion on IBM stock is cautiously bullish, with an overall “Moderate Buy” rating. Among the 20 analysts covering the stock, seven advise a “Strong Buy” rating, one suggests a “Moderate Buy,” ten suggest a “Hold,” and two advise a “Strong Sell.”
While IBM currently trades above its mean price target of $255.74, its Street-high price target is $325, implying a potential 13% upside from current market prices.
