{
  "@context": "https://frontierpicks.com/schemas/dossier.v1.json",
  "ticker": "IBM",
  "name": "International Business Machines Corporation",
  "url": "https://frontierpicks.com/dossiers/IBM/",
  "json_url": "https://frontierpicks.com/dossiers/IBM.json",
  "status": "WATCHLIST",
  "current_conviction": "LOW",
  "archetype": {
    "code": "a4",
    "n": 4
  },
  "current_thesis": "International Business Machines (IBM) shares look more likely to lag the S&P 500 over three months because faster software growth leans on the Confluent deal while the 4%–5% 2026 revenue outlook stayed put. The full-year report expected around 27 January 2027 settles it.",
  "invalidation_trigger": "A daily close above $254.32, the 2026-11-04 close before the 2026-11-05 tech selloff, which would show the shares leading again; or a 2027 constant-currency revenue outlook above 5%.",
  "catalyst_date": null,
  "portfolio": null,
  "pick": null,
  "themes": [
    "ai-enterprise-software"
  ],
  "tags": [],
  "sources": [],
  "caveats": [],
  "source_links": [
    {
      "title": "INTERNATIONAL BUSINESS MACHINES CORP - Form 10-Q - FY2026",
      "url": "https://www.sec.gov/Archives/edgar/data/0000051143/000005114326000095/ibm-20260930.htm",
      "date": null
    },
    {
      "title": "International Business Machines (NYSE:IBM) Stock Falls 1.3% - Time to Sell?",
      "url": "https://www.marketbeat.com/instant-alerts/price-international-business-machines-nyse-ibm-stock-falls-13-time-to-sell-2026-11-12/",
      "date": "2026-11-12"
    },
    {
      "title": "IBM and Microsoft Announce a New AI Agent Platform Designed for Industry-Specific Transformation",
      "url": "https://newsroom.ibm.com/2026-11-10-ibm-and-microsoft-announce-a-new-ai-agent-platform-designed-for-industry-specific-transformation",
      "date": "2026-11-10"
    },
    {
      "title": "IBM to End Immigration Sponsorship for Roles in Biggest Unit",
      "url": "https://www.bloomberg.com/news/articles/2026-11-10/ibm-to-end-immigration-sponsorship-for-roles-in-biggest-unit",
      "date": "2026-11-10"
    },
    {
      "title": "EU sues IBM, Atos and Leonardo over border system delays, FT reports",
      "url": "https://thenextweb.com/news/eu-sues-ibm-atos-leonardo-entry-exit-system",
      "date": "2026-11-09"
    },
    {
      "title": "Fears of an AI crackdown after midterms spark $2 trillion rout in tech stocks",
      "url": "https://www.kpbs.org/news/economy/2026/11/05/fears-of-an-ai-crackdown-after-midterms-spark-2-trillion-rout-in-tech-stocks",
      "date": "2026-11-05"
    },
    {
      "title": "International Business Machines (NYSE:IBM) Shares Down 2.7% - Here's What Happened",
      "url": "https://www.marketbeat.com/instant-alerts/price-international-business-machines-nyse-ibm-shares-down-27-heres-what-happened-2026-11-05/",
      "date": "2026-11-05"
    }
  ],
  "evidence": [
    {
      "claim": "Third-quarter 2026 revenue was $17.103 billion; software $7.804 billion, up 8.2% (8.7% adjusted for currency); consulting $5.335 billion, up 0.2%; infrastructure $3.707 billion, up 4.2%.",
      "source": "IBM Form 10-Q for the quarter ended 2026-09-30",
      "as_of": "2026-09-30"
    },
    {
      "claim": "Software annual recurring revenue was $24.9 billion, up about $2 billion from a year earlier; remaining performance obligations were about $69 billion, about 70% due within two years.",
      "source": "IBM Form 10-Q for the quarter ended 2026-09-30",
      "as_of": "2026-09-30"
    },
    {
      "claim": "Third-quarter free cash flow was $3.0 billion, up $0.7 billion; IBM kept 4%–5% constant-currency revenue growth for 2026 and expects free cash flow up more than $1 billion.",
      "source": "IBM third-quarter 2026 earnings release, 8-K Exhibit 99.1",
      "as_of": "2026-10-21"
    },
    {
      "claim": "CFO Jim Kavanaugh described over four points of organic growth within 9% constant-currency software growth; full-year software growth guided at about 7%–8%.",
      "source": "IBM third-quarter 2026 earnings call, Investing.com transcript",
      "as_of": "2026-10-21"
    },
    {
      "claim": "Long-term debt was $56.804 billion and goodwill $74.916 billion, up from $67.717 billion of goodwill at 2025-12-31.",
      "source": "IBM Form 10-Q for the quarter ended 2026-09-30",
      "as_of": "2026-09-30"
    },
    {
      "claim": "MarketBeat listed a Moderate Buy consensus with an average price target of $266.88 from 34 analysts: 19 buy, 13 hold and 2 sell.",
      "source": "MarketBeat, 2026-11-12",
      "as_of": "2026-11-12"
    },
    {
      "claim": "IBM and Microsoft launched Imagine Enterprise, an AI agent platform with more than 6,000 prebuilt IBM Consulting agents and assets, first targeting financial services, insurance and retail; no financial terms disclosed.",
      "source": "IBM newsroom release, 2026-11-10",
      "as_of": "2026-11-10"
    },
    {
      "claim": "eu-LISA is suing IBM, Atos and Leonardo in Harju County Court, Estonia, over Entry/Exit System delays; the contract was €142 million in 2019 and €212 million by 2021.",
      "source": "The Next Web, citing the Financial Times, 2026-11-09",
      "as_of": "2026-11-09"
    }
  ],
  "view_changes": [],
  "frame": null,
  "filed_numbers": {
    "as_of": "2026-11-13",
    "sector": "Technology",
    "financials": {
      "status": "ok",
      "reason": null,
      "close_date": "2026-11-13",
      "latest_quarter": "2026-09-30",
      "figures": {
        "revenue": {
          "status": "ok",
          "quarters": [
            {
              "end": "2026-09-30",
              "filed": "2026-10-22",
              "restated": null,
              "value_musd": 17103,
              "yoy_pct": 4.7
            },
            {
              "end": "2026-06-30",
              "filed": "2026-07-23",
              "restated": null,
              "value_musd": 17162,
              "yoy_pct": 1.1
            },
            {
              "end": "2026-03-31",
              "filed": "2026-04-23",
              "restated": null,
              "value_musd": 15917,
              "yoy_pct": 9.5
            },
            {
              "end": "2025-12-31",
              "filed": "2026-02-24",
              "restated": null,
              "value_musd": 19686,
              "yoy_pct": 12.1
            },
            {
              "end": "2025-09-30",
              "filed": "2025-10-23",
              "restated": null,
              "value_musd": 16331,
              "yoy_pct": 9.1
            },
            {
              "end": "2025-06-30",
              "filed": "2025-07-24",
              "restated": null,
              "value_musd": 16977,
              "yoy_pct": 7.7
            }
          ]
        },
        "gross_margin": {
          "status": "ok",
          "quarters": [
            {
              "end": "2026-09-30",
              "filed": "2026-10-22",
              "restated": null,
              "pct": 56.8
            },
            {
              "end": "2026-06-30",
              "filed": "2026-07-23",
              "restated": null,
              "pct": 57.7
            },
            {
              "end": "2026-03-31",
              "filed": "2026-04-23",
              "restated": null,
              "pct": 56.2
            },
            {
              "end": "2025-12-31",
              "filed": "2026-02-24",
              "restated": null,
              "pct": 60.6
            },
            {
              "end": "2025-09-30",
              "filed": "2025-10-23",
              "restated": null,
              "pct": 57.3
            },
            {
              "end": "2025-06-30",
              "filed": "2025-07-24",
              "restated": null,
              "pct": 58.8
            }
          ]
        },
        "operating_margin": {
          "status": "not reported"
        },
        "pretax_income": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-10-22",
          "value_musd": 2497
        },
        "net_income": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-10-22",
          "four_quarters_end": "2026-09-30",
          "value_musd": 2190,
          "four_quarters_musd": 11171
        },
        "operating_cash_flow": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-10-22",
          "first_end": "2025-12-31",
          "value_musd": 15831
        },
        "capital_spending": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-10-22",
          "first_end": "2025-12-31",
          "value_musd": 1175
        },
        "free_cash_flow": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-10-22",
          "first_end": "2025-12-31",
          "value_musd": 14656
        },
        "diluted_share_change": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-10-22",
          "base_end": "2025-09-30",
          "pct": 0.5
        },
        "cash": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-10-22",
          "value_musd": 9233
        },
        "debt": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-10-22",
          "value_musd": 70826,
          "composition": "long-term debt and finance leases plus short-term borrowings"
        },
        "net_cash": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-10-22",
          "value_musd": -61593
        },
        "deferred_revenue": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-10-22",
          "value_musd": 19482,
          "yoy_pct": 9.8
        },
        "backlog": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-10-22",
          "value_musd": 69000,
          "yoy_pct": 7.8
        },
        "receivables": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-10-22",
          "value_musd": 5794
        },
        "inventory": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-10-22",
          "value_musd": 1945
        },
        "equity": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-10-22",
          "value_musd": 35537
        },
        "market_value": {
          "status": "ok",
          "close_date": "2026-11-13",
          "basis_end": "2026-09-30",
          "basis_filed": "2026-10-22",
          "value_musd": 233567.7
        },
        "enterprise_value": {
          "status": "ok",
          "close_date": "2026-11-13",
          "basis_end": "2026-09-30",
          "basis_filed": "2026-10-22",
          "value_musd": 295160.7
        },
        "ev_sales": {
          "status": "ok",
          "close_date": "2026-11-13",
          "basis_end": "2026-09-30",
          "basis_filed": "2026-10-22",
          "multiple": 4.2
        },
        "ev_ebit": {
          "status": "not available"
        },
        "pe": {
          "status": "ok",
          "close_date": "2026-11-13",
          "basis_end": "2026-09-30",
          "basis_filed": "2026-10-22",
          "multiple": 20.9
        },
        "pb": {
          "status": "ok",
          "close_date": "2026-11-13",
          "basis_end": "2026-09-30",
          "basis_filed": "2026-10-22",
          "multiple": 6.6
        },
        "fcf_yield": {
          "status": "ok",
          "close_date": "2026-11-13",
          "basis_end": "2026-09-30",
          "basis_filed": "2026-10-22",
          "pct": 6.3
        }
      }
    },
    "short_interest": {
      "status": "ok",
      "settlement": "2026-10-15",
      "published": "2026-10-26",
      "short_pct_of_outstanding": 2.11,
      "days_to_cover": 3.6,
      "change_pct": -17.6
    },
    "insiders": {
      "status": "ok",
      "as_of": "2026-11-15",
      "windows": [
        {
          "days": 90,
          "status": "ok",
          "from": "2026-08-18",
          "bought_usd": 0,
          "sold_usd": 5758000,
          "bought_unpriced": 0,
          "sold_unpriced": 0
        },
        {
          "days": 365,
          "status": "ok",
          "from": "2025-11-16",
          "bought_usd": 417156.72,
          "sold_usd": 5758000,
          "bought_unpriced": 0,
          "sold_unpriced": 0
        }
      ]
    }
  },
  "body_markdown": "## Current Thesis\n\nInternational Business Machines (IBM) shares look more likely to lag the S&P 500 than lead it over the next three months. Faster software growth leans on the Confluent acquisition, and IBM kept its 4%–5% constant-currency revenue outlook for 2026 after the third quarter. The fourth-quarter and full-year report, expected around 2027-01-27, settles it: it shows whether 2026 revenue lands inside that range and what growth IBM guides for 2027.\n\nThe rating is Low because none of IBM's news since its 2026-10-21 third-quarter report has changed a financial target. That news covers a Microsoft agent platform, quantum processor announcements, a European lawsuit, a yen debt sale and an end to visa sponsorship for most consulting roles. The price already reflects a good deal of doubt: IBM closed at $244.67 on 2026-11-12, 26.4% below its 52-week intraday high of $332.46 set on 2026-06-02, while MarketBeat's average analyst target was $266.88 the same day.\n\n## Bull Case\n\n- **Software growth sped up.** Software revenue was $7.804 billion in the third quarter, up 8.2%, or 8.7% adjusted for currency, according to the 10-Q for the quarter ended 2026-09-30. Data software grew 19.1%.\n- **Recurring and contracted revenue is large.** Software annual recurring revenue was $24.9 billion at 2026-09-30, up about $2 billion from a year earlier, according to the 10-Q. Remaining performance obligations were about $69 billion, with about 70% expected to become revenue within two years.\n- **The cash flow outlook went up.** Third-quarter free cash flow was $3.0 billion, up $0.7 billion, according to IBM's 2026-10-21 release. IBM expects 2026 free cash flow to rise by more than $1 billion.\n- **Microsoft now sells alongside IBM Consulting.** Imagine Enterprise, announced on 2026-11-10, runs more than 6,000 prebuilt IBM Consulting agents and assets on Microsoft Foundry, Azure, Fabric and Copilot Studio, according to IBM's release. It first targets financial services, insurance and retail clients.\n- **Quantum milestones keep coming.** IBM announced its Nighthawk r3 processor on 2026-11-11, designed for 10,000 operations on 520 qubits, with a 1,040-qubit system planned for 2027, Benzinga reported. IBM showed a Quantum System Two computer in Chicago on 2026-11-06.\n- **The average target sits above the price.** MarketBeat listed an average analyst target of $266.88 on 2026-11-12, from 19 buy, 13 hold and 2 sell ratings. Stifel raised its target to $260 from $235 on 2026-10-22 and kept a buy rating.\n\n## Bear Case\n\n- **The revenue outlook did not move.** IBM kept 4%–5% constant-currency growth for 2026 after a 6% third quarter, according to its 2026-10-21 release. The guide leaves no room for a faster fourth quarter.\n- **Acquired revenue drives much of software.** The 10-Q attributes Data's 19.1% growth to Confluent and gives no separate Confluent revenue figure. Chief Financial Officer Jim Kavanaugh cited \"over four points of organic growth\" within 9% constant-currency software growth on the 2026-10-21 call, according to Investing.com's transcript.\n- **Consulting is flat.** Consulting revenue was $5.335 billion in the third quarter, up 0.2%, according to the 10-Q. The Microsoft platform came with no revenue, pricing or client figures. Bloomberg reported on 2026-11-10 that IBM has ended visa and green card sponsorship for most roles in IBM Consulting, its largest unit.\n- **Several targets sit near the price.** Morgan Stanley set a $240 target with an equal-weight rating and UBS a $243 target with a neutral rating, both on 2026-10-22, MarketBeat reported. Both are below the 2026-11-12 close.\n- **The balance sheet carries the deal.** Long-term debt was $56.804 billion and goodwill $74.916 billion at 2026-09-30, up from $67.717 billion of goodwill at 2025-12-31, according to the 10-Q. IBM announced an offering of several series of yen-denominated notes on 2026-11-09.\n- **A European lawsuit is open.** The Financial Times reported on 2026-11-09 that eu-LISA, the EU agency that runs large border IT systems, is suing IBM, Atos and Leonardo over delays to the Entry/Exit System. The Next Web put the contract at €142 million in 2019 and €212 million by 2021.\n- **Policy fears hit the whole sector.** KPBS reported a $2 trillion tech selloff on 2026-11-05 on fears of tighter AI rules after the midterms. IBM closed at $247.11 that session; MarketBeat reported the shares down 2.7% on the day.\n\n## Setup & Price Structure\n\nIBM closed at $244.67 on 2026-11-12. The shares are up 5.1% over three months on adjusted daily closes. The last close sits above the 50-day moving average of $236.24 and just above the 200-day moving average of $243.46, both as of 2026-11-12.\n\nThe 52-week range runs from a closing low of $205.77 on 2026-07-22 to an intraday high of $332.46 on 2026-06-02. Since the 2026-11-05 selloff the shares have closed between $244.53 on 2026-11-10 and $248.22 on 2026-11-11, with no recovery of the pre-selloff close of 2026-11-04.\n\nThe kill line is that 2026-11-04 close: recovering it without any change to the revenue outlook would show the shares leading. MarketBeat's $266.88 average analyst target is the next reference above it. A close back under the 200-day average would put the shares back in the lower part of their range since July.\n\n## Catalyst Calendar\n\n- **2026-12-10:** Payment of the $1.69 quarterly dividend declared on 2026-10-21. A routine date that settles nothing in the case; IBM has announced no earnings or guidance event before mid-December 2026.\n- **~2027-01-03 (est.):** New Congress convenes after the November 2026 midterms. Shows whether AI and data-center legislation moves forward, the fear behind the 2026-11-05 tech selloff that pulled IBM down with the sector.\n- **~2027-01-27 (est.):** Fourth-quarter and full-year 2026 results with 2027 outlook. Shows whether full-year revenue lands inside the 4%–5% range, whether software holds its 7%–8% guide, and whether the 2027 outlook implies growth above 5%.\n\n## What Would Change Our Mind\n\nA daily close above $254.32, the 2026-11-04 close before the 2026-11-05 tech selloff, which would show the shares leading again; or a 2027 constant-currency revenue outlook above 5%.\n\n## Correlation Notes\n\nIBM trades with large-cap software and IT services. It fell with the sector in the 2026-11-05 selloff that KPBS tied to fears of an AI crackdown after the midterms. Consulting ties it to IT services companies; software, now including Confluent's data-streaming business, ties it to enterprise data and AI software. Imagine Enterprise, launched on 2026-11-10, links part of IBM Consulting's agent work to Microsoft's Azure. IBM's yen, euro and sterling debt means currency moves feed into its reported figures.",
  "first_seen": "2026-11-10",
  "last_analyzed": "2026-11-12T23:47:02+00:00",
  "last_synthesized": "2026-11-12",
  "date_modified": "2026-11-12",
  "license": "Content © FrontierPicks. Cite the canonical URL."
}