We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
IBM (IBM) Up 9.5% Since Last Earnings Report: Can It Continue?
Read MoreHide Full Article
A month has gone by since the last earnings report for IBM (IBM - Free Report) . Shares have added about 9.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is IBM due for a pullback? Well, first let's take a quick look at its most recent earnings report in order to get a better handle on the recent catalysts for International Business Machines Corporation before we dive into how investors and analysts have reacted as of late.
IBM Beats Q1 Earnings Estimates on Solid Revenues & Margin Expansion
IBM reported strong first-quarter 2026 results, with adjusted earnings and revenues beating the respective Zacks Consensus Estimate.
The company witnessed healthy demand trends for hybrid cloud and artificial intelligence (AI) solutions with a client-focused portfolio and broad-based growth. Despite economic uncertainty stemming from geopolitical conflicts and volatility in crude oil prices, the company expects to deliver sustainable growth through advanced technology and deep consulting expertise, supported by diversity across businesses, geographies and industries.
Net Income
On a GAAP basis, net income for the reported quarter was $1.216 billion or $1.28 per share compared with $1.055 billion or $1.12 per share in the year-ago quarter. The significant improvement in GAAP earnings was primarily due to top-line growth.
Excluding non-recurring items, non-GAAP net income from continuing operations was $1.91 per share compared with $1.60 in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 10 cents.
Quarter Details
Quarterly total revenues increased to $15.92 billion from $14.54 billion on strong demand for hybrid cloud and AI, driving growth in the Software segment. On a constant currency basis, revenues were up 6% year over year. The top line exceeded the consensus estimate of $15.68 billion.
Gross profit increased to $8.95 billion from $8.03 billion in the prior-year quarter, resulting in respective gross margins of 56.2% and 55.2%, driven by a solid portfolio mix. Total expenses increased to $7.56 billion from $6.87 billion on higher research and development costs.
Segmental Performance
Software: Revenues improved to $7.05 billion from $6.34 billion, driven by growth in Hybrid Cloud (up 10% year over year), Automation (7%), Data (16%) and Transaction Processing (2%). Segment profit was $2.1 billion compared with $1.85 billion in the year-ago quarter for margins of 29.8% and 29.1%, respectively. The company is witnessing healthy hybrid cloud adoption by clients and solid demand trends across automation and generative AI offerings like watsonx.
Consulting: Revenues were $5.27 billion compared with $5.07 billion a year ago, with growth in Strategy and Technology, and Intelligent Operations. Segment profit remained flat at $558 million, while margin declined to 10.6% from 11% a year ago.
Infrastructure: Revenues were $3.33 billion compared with $2.89 billion on higher demand for hybrid and distributed infrastructure. Segment profit was $524 million compared with $248 million in the year-ago quarter, for respective margins of 15.8% and 8.6%. This reflected strength in the IBM Z, Power and Storage offerings. Higher investments in the business across areas like AI, hybrid cloud and quantum also buoyed segment performance.
Financing: Revenues improved to $220 million from $191 million a year ago. Segment profit was up to $118 million from $69 million in the year-ago quarter for respective margins of 53.8% and 35.8%.
Cash Flow & Liquidity
During the quarter, IBM generated $5.17 billion in cash from operations compared with $4.37 billion in the year-ago quarter. Free cash flow was $2.22 billion in the quarter, up from $1.96 billion in the prior-year period, driven by higher profit and working capital efficiencies. As of March 31, 2026, the company had $10.82 billion in cash and cash equivalents with $57.71 billion of long-term debt.
Outlook
For 2026, the company expects revenues to grow more than 5% on a constant currency basis, driven by a strong portfolio mix, operating leverage and yield from productivity initiatives. Free cash flow is expected to increase by about $1 billion year over year.
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed a downward trend in estimates review.
VGM Scores
At this time, IBM has a average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Following the exact same course, the stock was allocated a score of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, IBM has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Zacks' 7 Best Strong Buy Stocks (New Research Report)
Valued at $99, click below to receive our just-released report
predicting the 7 stocks that will soar highest in the coming month.
View the Zacks #1 Rank List
Image: Bigstock
IBM (IBM) Up 9.5% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for IBM (IBM - Free Report) . Shares have added about 9.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is IBM due for a pullback? Well, first let's take a quick look at its most recent earnings report in order to get a better handle on the recent catalysts for International Business Machines Corporation before we dive into how investors and analysts have reacted as of late.
IBM Beats Q1 Earnings Estimates on Solid Revenues & Margin Expansion
IBM reported strong first-quarter 2026 results, with adjusted earnings and revenues beating the respective Zacks Consensus Estimate.
The company witnessed healthy demand trends for hybrid cloud and artificial intelligence (AI) solutions with a client-focused portfolio and broad-based growth. Despite economic uncertainty stemming from geopolitical conflicts and volatility in crude oil prices, the company expects to deliver sustainable growth through advanced technology and deep consulting expertise, supported by diversity across businesses, geographies and industries.
Net Income
On a GAAP basis, net income for the reported quarter was $1.216 billion or $1.28 per share compared with $1.055 billion or $1.12 per share in the year-ago quarter. The significant improvement in GAAP earnings was primarily due to top-line growth.
Excluding non-recurring items, non-GAAP net income from continuing operations was $1.91 per share compared with $1.60 in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 10 cents.
Quarter Details
Quarterly total revenues increased to $15.92 billion from $14.54 billion on strong demand for hybrid cloud and AI, driving growth in the Software segment. On a constant currency basis, revenues were up 6% year over year. The top line exceeded the consensus estimate of $15.68 billion.
Gross profit increased to $8.95 billion from $8.03 billion in the prior-year quarter, resulting in respective gross margins of 56.2% and 55.2%, driven by a solid portfolio mix. Total expenses increased to $7.56 billion from $6.87 billion on higher research and development costs.
Segmental Performance
Software: Revenues improved to $7.05 billion from $6.34 billion, driven by growth in Hybrid Cloud (up 10% year over year), Automation (7%), Data (16%) and Transaction Processing (2%). Segment profit was $2.1 billion compared with $1.85 billion in the year-ago quarter for margins of 29.8% and 29.1%, respectively. The company is witnessing healthy hybrid cloud adoption by clients and solid demand trends across automation and generative AI offerings like watsonx.
Consulting: Revenues were $5.27 billion compared with $5.07 billion a year ago, with growth in Strategy and Technology, and Intelligent Operations. Segment profit remained flat at $558 million, while margin declined to 10.6% from 11% a year ago.
Infrastructure: Revenues were $3.33 billion compared with $2.89 billion on higher demand for hybrid and distributed infrastructure. Segment profit was $524 million compared with $248 million in the year-ago quarter, for respective margins of 15.8% and 8.6%. This reflected strength in the IBM Z, Power and Storage offerings. Higher investments in the business across areas like AI, hybrid cloud and quantum also buoyed segment performance.
Financing: Revenues improved to $220 million from $191 million a year ago. Segment profit was up to $118 million from $69 million in the year-ago quarter for respective margins of 53.8% and 35.8%.
Cash Flow & Liquidity
During the quarter, IBM generated $5.17 billion in cash from operations compared with $4.37 billion in the year-ago quarter. Free cash flow was $2.22 billion in the quarter, up from $1.96 billion in the prior-year period, driven by higher profit and working capital efficiencies. As of March 31, 2026, the company had $10.82 billion in cash and cash equivalents with $57.71 billion of long-term debt.
Outlook
For 2026, the company expects revenues to grow more than 5% on a constant currency basis, driven by a strong portfolio mix, operating leverage and yield from productivity initiatives. Free cash flow is expected to increase by about $1 billion year over year.
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed a downward trend in estimates review.
VGM Scores
At this time, IBM has a average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Following the exact same course, the stock was allocated a score of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, IBM has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.