Shares of International Business Machines (IBM Quick QuoteIBM - Free Report) jumped 5.1% on the bourses on Jan. 29, following the release of its better-than-expected fourth-quarter 2025 results. The company comfortably surpassed analysts’ estimates on both top and bottom-line counts. 

Looking ahead, the technology firm expects annual revenue growth to exceed 5% by the end of 2026 on a constant-currency basis, driven by a strong portfolio mix, operating leverage and productivity-related yield. IBM also projects free cash flow to increase by $1 billion.

Such an upbeat outlook, coupled with its strong quarterly outperformance, has boosted investor confidence in the stock, resulting in a price increase. In fact, IBM’s share price continued its rally with an additional 1.8% gain yesterday compared with its Jan. 29 level.

Amid this backdrop, exchange-traded fund (ETF) investors, particularly those interested in the technology sector, might want to gain exposure to IBM via the basket approach by investing in ETFs heavily exposed to this company. 

But before suggesting such ETFs, let us delve a bit deeper into IBM’s fourth-quarter results to assess the company’s performance across other metrics and gauge the market’s reaction in terms of rating upgrades or downgrades.

A Closer Look at IBM’s Q4 Earnings

IBM’s fourth-quarter adjusted earnings per share (EPS) of $4.52 beat the Zacks Consensus Estimate by 4.4%, while revenues exceeded the consensus mark by 2.5%. On a year-over-year basis, both EPS and revenues rose by double digit. 

The company’s 9% revenue growth at constant currency in the reported quarter marked its highest level in over three years. 

Segment-wise, all four segments registered positive year-over-year growth, with the Infrastructure unit posting the strongest increase of 21%, driven primarily by strength in the z17 platform.

As of the end of the fourth quarter, IBM’s cumulative GenAI book of business exceeded $12.5 billion, with the Software unit accounting for more than $2 billion and Consulting contributing over $10.5 billion; both recorded their largest quarterly increases to date.

In Quantum computing, the company made steady progress in the final quarter of 2025 by advancing its development roadmap, improving error-correction capabilities, and expanding ecosystem partnerships. Notably, it collaborated with organizations such as Cisco and participated in government initiatives, including the U.S. Department of Energy’s Genesis Mission and DARPA’s Quantum Benchmarking Initiative, to build scalable, fault-tolerant quantum systems. IBM remains on track to deliver its first large-scale, fault-tolerant quantum computer by 2029.

As far as IBM’s financial position is concerned, the company ended 2025 with a strong liquidity position, holding cash of $14.5 billion. It invested $8.3 billion in acquisitions and returned $6.3 billion to shareholders in the form of dividends.

Moreover, free cash flow rose to $7.55 billion in the fourth quarter from $6.16 billion in the prior-year period, driven by higher profitability and working-capital efficiencies.

Analysts’ Reaction

Following IBM’s fourth-quarter earnings release, Bank of America analyst Wamsi Mohan reiterated a buy rating for the stock but raised the target price from $335 to $340 (as cited in Yahoo Finance). 

In a similar line of action, Bernstein SocGen Group analyst Mark C. Newman raised the price target on IBM stock to $330.00 from $280.00, while maintaining a “Market Perform” rating (as cited in Finviz).

IBM-Heavy ETFs to Watch

Considering the upbeat price target hike and IBM’s positive outlook, investors may want to keep the following ETFs on their watchlist and invest when appropriate to gain exposure to IBM while minimizing single-stock concentration risk.

First Trust NASDAQ Technology Dividend Index Fund (TDIV Quick QuoteTDIV - Free Report)

This fund, with net assets worth $3.81 billion, offers exposure to 93 technology and telecommunications companies that pay a regular or common dividend. IBM holds the second position in this ETF, with 7.81% weightage in the fund. 

TDIV has surged 24.7% over the past year. It charges 50 basis points (bps) as fees. 

FT Vest Technology Dividend Target Income ETF (TDVI Quick QuoteTDVI - Free Report)

This fund, with net assets worth $281 million, seeks to provide investors with current income with a secondary objective of providing capital appreciation. IBM holds the second position in this ETF, with 7.81% weightage in the fund. 

TDVI has soared 14.9% over the past year. It charges 75 bps as fees. 

AXS Green Alpha ETF (NXTE Quick QuoteNXTE - Free Report)

This is an actively managed portfolio that offers exposure to 53 companies meeting sustainability criteria, including advancing economic productivity, renewable energy, waste-to-value supply chains, and equitable wealth distribution. IBM holds the second position in this ETF, with 6.04% weightage in the fund. 

NXTE has rallied 28.3% over the past year. It charges 100 bps as fees. 

State Street SPDR Portfolio S&P Sector Neutral Dividend ETF (SPDG Quick QuoteSPDG - Free Report)

This fund, with net assets worth $11.8 million, offers exposure to 284 large, mid, and small-cap companies that have increased or maintained their dividend for seven or more consecutive years. IBM holds the third position in this ETF, with 5.71% weightage in the fund. 

SPDG has gained 13% over the past year. It charges 5 bps as fees. 

Invesco Dow Jones Industrial Average Dividend ETF (DJD Quick QuoteDJD - Free Report)

This fund, with a market value worth $415.7 million, offers exposure to 29 dividend-paying equity securities. IBM holds the sixth position in this ETF, with 5.40% weightage in the fund. 

DJD has rallied 13.1% over the past year. It charges 7 bps as fees.