International Business Machines Corp. (NYSE:IBM) shares fell sharply premarket Thursday despite a Q1 earnings beat, as slowing growth and rising AI disruption fears weighed on sentiment.
Revenue growth slowed to 9% from 12.2% in the prior quarter, with momentum cooling in the key software segment. Broader weakness across enterprise software—following cautious commentary from ServiceNow, Inc. (NYSE:NOW)—added to the pressure.
Earnings Snapshot
IBM reported quarterly earnings of $1.91 per share, which beat analyst estimates of $1.81 by 5.52%, according to Benzinga Pro data.
Quarterly revenue of $15.92 billion beat the consensus estimate of $15.62 billion and was up from $14.54 billion in the prior year’s quarter.
Total revenue growth slowed to 9% this quarter, down from 12.2% in the previous quarter. Growth in the critical software segment also showed signs of cooling, which pressured the stock.
IBM’s software division revenue growth slowed to 11.3% in the quarter, down from 14% in the previous quarter.
IBM expects more than 5% constant currency growth and an increase of approximately $1 billion in year-over-year cash flow in 2026.
Conference Call Takeaways
IBM completed the acquisition of Confluent during the quarter, enhancing its capabilities in data streaming and hybrid cloud.
The company deployed $10.5 billion toward acquisitions in the quarter, largely driven by the Confluent transaction.
IBM Z continued to show strong momentum, delivering record performance with 48% growth as enterprises modernize mission-critical workloads.
OpenShift reached $2 billion in annual recurring revenue (ARR), while virtualization contributed more than $600 million in contracts since 2024.
Also, the company has generated $4.5 billion in productivity savings since 2023 and expects an additional $1 billion in 2026.
IBM reiterated its confidence in AI-driven growth, noting that AI is now deeply integrated across enterprise workflows, infrastructure, and consulting services.
Analyst Consensus & Recent Actions: The stock carries a Buy Rating with an average price target of $303.27. Recent analyst moves include:
- Jefferies: Buy (Lowers Target to $320.00) (April 20)
- RBC Capital: Outperform (Lowers Target to $330.00) (April 17)
- Wedbush: Outperform (Maintains Target to $340.00) (April 17)
Benzinga Edge Rankings
Below is the Benzinga Edge scorecard for International Business Machines, highlighting its strengths and weaknesses compared to the broader market:
- Momentum: Weak (Score: 15.39) — The stock’s recent trend strength is lagging, matching its position below key moving averages.
- Quality: Strong (Score: 77.42) — The fundamentals screen well versus peers, which can help support longer-term confidence.
- Value: Weak (Score: 26.06) — Valuation looks less compelling on this model, so buyers may demand clearer re-acceleration.
- Growth: Neutral (Score: 51.17) — Growth characteristics are middle-of-the-pack, not a clear driver either way.
The Verdict: International Business Machines’ Benzinga Edge signal reveals a quality-leaning profile with weak momentum, meaning the business scores well but the chart still needs repair. If support near $230.50 holds, the next technical debate becomes whether price can work back toward the $260.50 resistance zone.
Top ETF Exposure
- Amplify CWP Enhanced Dividend Income ETF (NYSE:DIVO): 4.59% Weight
- First Trust NASDAQ Technology Dividend Index Fund (NASDAQ:TDIV): 8.41% Weight
- Invesco Dow Jones Industrial Average Dividend ETF (NYSE:DJD): 5.09% Weight
Significance: Because IBM carries such a heavy weight in these funds, any significant inflows or outflows for these ETFs will likely force automatic buying or selling of the stock.
Price Action
IBM Stock Price Activity: IBM shares were down 7.64% at $232.62 during premarket trading on Thursday, according to Benzinga Pro data.
Photo via Shutterstock
Recent Comments