IBMNarrow moat

IBM — overall economic moat

Investment snapshot
Narrow moat→ Holding steadyConfidenceMediumValuationFair
Strongest advantageThe mainframe franchise: clients holding 85% of installed capacity keeping or growing it, with $8.6bn of Transaction Processing software and $5.1bn of support around the machines
Greatest threatBought growth: $10.5bn of acquisitions in H1 2026 against $4.8bn of free cash flow, goodwill $67.7bn, and a mainframe trough (IBM Z -42% in Q2 2026) that cut guidance
Key metricReturn on invested capital, 12.9% in FY2025 (10.2% at a 21% tax rate) against an 8% hurdle
Verdict: IBM owns one of the stickiest franchises in enterprise technology: mainframe clients rarely leave, and the software around them renews year after year at a 33% segment margin. Around that core it has built a narrow moat of acquired software, Red Hat above all, and a thin one in consulting. The pension that weighed on it for a decade is now funded, and free cash flow reached $14.7 billion in 2025. But growth is increasingly bought, the mainframe cycle has just shown how violently it can move the shares, and returns only just clear the cost of capital at a normal tax rate. At about 20 times earnings the price is fair for a steady compounder, not cheap.
📈 IBM valuation, revenue & earnings — P/E, P/S, revenue, EPS →

IBM sells the software, consulting and mainframe computers that large organisations run their core systems on, and it makes most of its profit from the software. It employed 264,300 people in its wholly owned companies at the end of 20251 and has clients in more than 175 countries2.

Total revenue ($bn)81.7201579.6201873.62020 as filed55.22020 restated60.5202267.52025SEC EDGAR companyfacts; IBM 2021 and 2025 Annual Reports; Kyndryl spun off 2021
Smaller by spin-off, growing since.

Revenue was $67,535 million in 2025, up about 7.6%34. It came from four segments. Software, which includes Red Hat and the software that runs on IBM's mainframes, brought in $29,962 million; Consulting $21,055 million; Infrastructure, the IBM Z mainframes, Power servers, storage and their support, $15,718 million; and Financing, loans and leases to clients buying IBM products, $737 million5.

The segments make money very differently. Software earned a 33.1% segment margin and Consulting 11.7%6, so Software produced about 61% of segment profit on about 44% of segment revenue7. About 80% of software revenue recurs8. Infrastructure moves in waves with each new mainframe: IBM Z revenue rose 51.7% in 2025 on the z17 launch9 and fell 42.0% in the second quarter of 202610.

The company is smaller than it once was, by design. Revenue was $81,741 million in 201511, but that included the managed infrastructure business IBM spun off as Kyndryl on 3 November 202112; on the restated basis, 2020 revenue was $55,179 million13. Since 2019 IBM has instead bought software: Red Hat for about $34 billion14, HashiCorp for $7,433 million15 and Confluent for $11,602 million16. Goodwill was $67,717 million at the end of 202517.

It is a cash business. Free cash flow was $14,734 million in 202518. IBM paid $6,255 million in dividends19 and has raised its quarterly dividend for 31 consecutive years20; it has made no share buybacks since 201921. Net income was $10,593 million, or $11.17 a diluted share, helped by a tax benefit from resolving audit matters2223.

The market was reminded of the cycle in July. The shares fell 25% on 14 July 2026, their worst day on record, when IBM warned of a mainframe shortfall24. At $225.51 on 25 September 2026 IBM was worth $212.46 billion, about 20 times trailing earnings25.

The ownership is as diffuse as the client base. The largest holders are index managers: Vanguard with 92,822,090 shares, about 10.03%, BlackRock with 75,479,656 and State Street with 55,035,82126. There is one class of stock and no controlling holder. Arvind Krishna has been chief executive since 2020 and is also chairman27. The share count has drifted up since buybacks stopped: 938,034,404 shares were outstanding in February 202628 and 942,134,390 at the end of June29. The market value is $212.46 billion, and the enterprise value, which adds net debt, $269.60 billion30.

The moat is narrow overall: wide around the mainframe, narrow around the software, thin in consulting. The number that would falsify even the narrow verdict is return on invested capital, 12.9% in 2025 but about 10.2% at a normal 21% tax rate, against an 8% hurdle31; if it falls back below that line, IBM's acquisitions are costing more than its franchise earns.

The number that tests this moat
Reported
Revenue, and where it comes from
$67.5bn in FY2025: Software $30.0bn, Consulting $21.1bn, Infrastructure $15.7bn, Financing $0.7bn

Software earns about 61% of segment profit on 44% of revenue. Watch Software's share of profit.

Source: IBM 2025 Annual Report ↗
Moat scorecardHow ratings work →
Switching costs8/10
Network effects2/10
Pricing power5/10
Hard to replicate6/10
Disruption resistance5/10
Overall durability6/10

Switching costs are the core: clients holding 85% of mainframe capacity keep or grow it, and 80% of software revenue recurs. Network effects are minimal. Pricing power is middling: Transaction Processing renews but Consulting is an open market and hardware competes for capital budgets. The mainframe and its software stack are hard to replicate; consulting and much acquired software are not. Disruption resistance is moderate: the clouds that carry Red Hat also sell rival products. Durability sits in the narrow band: wide around the mainframe, narrow in software, thin in consulting.

Dig deeper
DIG DEEPER 01
The Revenue Lines
IBM's four revenue lines split into one that earns most of the profit, one that carries most of the people, and one that swings with the mainframe.
DIG DEEPER 02
The Moat
IBM's mainframe is a wide moat, its software a narrow one and its consulting a thin one, and together they earn only just above the cost of capital at…
DIG DEEPER 03
Competitors
IBM's rivals are its partners, its peers in consulting, its former division and the server makers, and it wins mainly where its own products are…
DIG DEEPER 04
Major Clients
No IBM client reaches 10% of revenue, but the $68 billion backlog is disclosed only as a total, so its concentration is unknown.
✦ Future bets — beyond today's moat
✦ FUTURE BET 01
The Future Bets
IBM's bets on quantum, open-source security and AI are aimed at the clients it already has, which makes them plausible and unproven.
⚠ Threats to the moat
⚠ THREAT 01
The Worst Day on Record
IBM lost a quarter of its value in one day on a quarter in which revenue grew, because the market priced the mainframe cycle as a franchise problem.
⚠ THREAT 02
Sixty-Two Billion of Debt, Eight Billion of Cash
IBM's cash has fallen to $8.2 billion while its debt reached $62 billion, and the dividend and the deals both claim the same free cash flow.
◆ What the market may be missing
◆ THE VARIANT VIEW
What the Market Isn't Pricing In
IBM has closed its pension gap and its revenue has grown since the Kyndryl spin, yet it trades at 20 times earnings as if both old worries remained.
◆ THE VARIANT VIEW
Inside the Latest Quarter (Q2 2026)
IBM's second quarter grew revenue 1% and software 5%, but a 42% fall in the mainframe forced the first guidance cut of the z17 cycle.
References
  1. ReportedIt employed 264,300 people in its wholly owned companies at the end of 2025 and has clients in more than 175 countries.
    IBM 2025 Annual Report to stockholders - employees and related workforce at 31 December 2025 (264.3 thousand in IBM and wholly owned subsidiaries). — FY2025 · publ. March 2026 · source ↗
  2. ReportedIt employed 264,300 people in its wholly owned companies at the end of 2025 and has clients in more than 175 countries.
    IBM 2025 Annual Report (Form 10-K exhibit) - management discussion, consolidated financial statements and notes - geographic revenue and major clients. — FY2025 · publ. 24 February 2026 · source ↗
  3. ReportedRevenue was $67,535 million in 2025, up about 7.6%.
    IBM 2025 Annual Report (Form 10-K exhibit) - management discussion, consolidated financial statements and notes - financial statements and notes: income statement, cash flow, borrowings, goodwill, acquisitions, pensions and market risk. — FY2025 · publ. 24 February 2026 · source ↗
  4. Moat Explorer calcRevenue was $67,535 million in 2025, up about 7.6%.
    Moat Explorer calculation from IBM's reported figures ($ millions unless stated). Segment mix 2025: Software 29,962 / 67,472 = 44.4% of segment revenue and 9,920 / 16,364 = 60.6% of segment profit; Consulting 21,055 / 67,472 = 31.2% and 2,464 / 16,364 = 15.1%; Infrastructure 15,718 / 67,472 = 23.3% and 3,458 / 16,364 = 21.1%; Financing 737 / 67,472 = 1.1% and 521 / 16,364 = 3.2%. Segment revenue below reported revenue: 60,530 - 59,621 = 909 (2022); 61,860 - 61,229 = 631 (2023); 62,753 - 62,510 = 243 (2024); 67,535 - 67,472 = 63 (2025). Growth: revenue 67,535 / 62,753 - 1 = 7.6% (2025); 62,753 / 61,860 - 1 = 1.4% (2024); Q2 2026 17,162 / 16,977 - 1 = 1.1%; Software 25,011 / 23,629 - 1 = 5.8%, 27,085 / 25,011 - 1 = 8.3%, 29,962 / 27,085 - 1 = 10.6%; Software Q2 2026 7,761 / 7,387 - 1 = 5.1%; Consulting 20,884 / 20,058 - 1 = 4.1%, 20,692 / 20,884 - 1 = -0.9%, 21,055 / 20,692 - 1 = 1.8%, 21,055 / 20,058 - 1 = 5.0% over three years, Q2 2026 5,327 / 5,314 - 1 = 0.2%; Infrastructure 14,593 / 15,288 - 1 = -4.5%, 14,020 / 14,593 - 1 = -3.9%, 15,718 / 14,020 - 1 = 12.1%, Q2 2026 3,835 / 4,142 - 1 = -7.4%; Financing 737 / 713 - 1 = 3.4%, Q2 2026 186 / 166 - 1 = 12.0%; Transaction Processing 8,603 / 7,714 - 1 = 11.5% and 8,603 - 7,714 = 889 added 2023-2025; Hybrid Cloud 7,327 - 5,827 = 1,500 added 2023-2025; 11% to 13% of 7,327 = 806 to 952 a year; OpenShift 30% x 2.0bn = 0.6bn a year; Infrastructure Support 5,100 / 6,021 - 1 = -15.3% (2021-2025) and 4,800 / 5,100 - 1 = -5.9%; research and development 8,316 / 7,479 - 1 = 11.2%; Software segment profit 9,920 / 7,012 - 1 = 41.5%; Consulting segment profit 2,464 / 1,871 - 1 = 31.7%; financing receivables 15,193 / 11,738 - 1 = 29.4%; total debt 62.0bn - 50.9bn = 11.1bn since 2022. Shares: mainframe-linked revenue 10,618 + 8,603 + 5,100 = 24,321, and 24,321 / 67,535 = 36.0%; Hybrid Cloud 7,327 / 29,962 = 24.5% of Software; OpenShift 2.0 / 24.6 = 8.1% of software ARR; June 2026 ARR 24.6bn / 2025 Software revenue 29.962bn = 82.1%; revenue outside the United States 40,643 / 67,535 = 60.2%, so about 60%; research and development 8,316 / 67,535 = 12.3% of revenue; quantum more than 10bn / 5 years = more than 2bn a year, and 2.0 / 8.316 = 24%, about a quarter; goodwill 67,717 / 151,880 = 44.6% of total assets; goodwill plus intangibles (67,717 + 11,391) / 151,880 = 52.1%; other assets 151,880 - 67,717 - 11,391 = 72,772; HashiCorp goodwill 4,684 / 7,433 = 63.0%; Confluent goodwill 7,238 / 11,602 = 62.4%, other net assets 11,602 - 7,238 = 4,364; stock-based compensation 1,685 / 16,364 = 10.3% of segment profit; Kyndryl spin 55,179 / 73,620 - 1 = -25.0% of 2020 revenue, about a quarter. Margins: Software Q2 2025 2,296 / 7,387 = 31.1%; Consulting Q2 2025 562 / 5,314 = 10.6%; Infrastructure Q2 2026 835 / 3,835 = 21.8% and Q2 2025 965 / 4,142 = 23.3%; total segment profit Q2 2026 4,092 / 17,110 = 23.9% and Q2 2025 4,003 / 17,009 = 23.5%; Financing Q2 2026 108 / 186 = 58% (reported 58.0%); pre-tax margin 10,328 / 67,535 = 15.3%; Global Technology Services 2020 117 / 27,039 = 0.4%; gross margin Q2 2026 9,907 / 17,162 = 57.7% and Q2 2025 9,977 / 16,977 = 58.8%. Red Hat: 7,327 / 35,100 = 20.9% of consideration; pre-tax at the Software margin 0.331 x 7,327 = 2,425, and 2,425 / 35,100 = 6.9%, about 7%; after a 21% tax 6.9% x 0.79 = 5.5%; revenue needed for 8% after tax 0.08 x 35,100 / (0.331 x 0.79) = 10,738, about 10.7bn, which is 10,738 / 7,327 = 1.47 times 2025 revenue: about 3.2 years at 12.5% growth, 4.4 years at 9% and 7.8 years at 5%. Cash and capital: acquisitions plus dividends 2025 8,294 + 6,255 = 14,549, and 14,549 / 14,734 = 98.7% of free cash flow; first half 2026 acquisitions 10.5bn / free cash flow 4.8bn = 2.2 times; dividends 6,255 / 10,593 = 59.0% of net income; Consulting backlog 31.9bn / 21.055bn = 1.5 years of revenue; remaining performance obligations 71bn - 68bn = 3bn lower in six months; pension risk transfers 16 + 6 + 1.2 = 23.2bn; defined-benefit obligations 14,460 + 29,872 = 44,332 against plan assets 18,073 + 26,733 = 44,806; free cash flow guidance 14.7bn + 1.0bn = 15.7bn. Further: revenue per employee 67,535 / 264.3 thousand = about 255,500 dollars; Q2 2026 Software share of segment profit 2,502 / 4,092 = 61.1%; first-half Software 14,813 / 13,722 - 1 = 8.0%; amortisation of acquired intangibles 2,166 / 1,627 - 1 = 33.1%; free cash flow 14.7 / 6.5 = 2.3 times (2021-2025); Q2 2026 Transaction Processing 2,208 - 2,030 = 178 lower, Data 1,782 - 1,499 = 283 higher, Hybrid Cloud 1,998 - 1,796 = 202 higher, Transaction Processing above Hybrid Cloud by 2,030 - 1,998 = 32; share price 225.51 / 332.46 - 1 = -32.2% from the 52-week high; first half 2026 Hybrid Cloud 3,903 / 3,483 - 1 = 12.1%, Transaction Processing 3,963 / 4,037 - 1 = -1.8%, Hybrid Infrastructure 4,678 / 4,512 - 1 = 3.7%, Infrastructure Support 2,483 / 2,515 - 1 = -1.3%, Automation 3,692 / 3,467 - 1 = 6.5%, Data 3,256 / 2,736 - 1 = 19.0%, Financing 406 / 357 - 1 = 13.7%, Strategy and Technology 5,829 / 5,702 - 1 = 2.2%, Intelligent Operations 4,770 / 4,680 - 1 = 1.9%; Strategy and Technology Q2 2026 2,933 / 2,920 - 1 = 0.4%; Infrastructure Support 2021 share 6,021 / 14,188 = 42.4%; Infrastructure 2020 pre-tax margin 1,654 / 14,533 = 11.4%; Consulting 2020 pre-tax margin 1,034 / 16,257 = 6.4%; buybacks 2015-2019 4,609 + 3,502 + 4,340 + 4,443 + 1,361 = 18,255; Hybrid Cloud 7,327 / 67,535 = 10.8% of revenue, about a tenth; acquisitions 2023 to June 2026 5.1 + 3.3 + 8.3 + 10.5 = 27.2bn; HashiCorp net of acquired cash and securities 7,433 - 929 - 331 = 6,173; ARR 24.6 - 21.3 = 3.3bn from end-2024 to June 2026; net interest excluding Financing 1,312 / 984 - 1 = 33.3%; 2024 signings 25,103 / 20,692 = 1.21, about 21% above revenue; generative AI book 12.5 - 9.5 = 3.0bn added in Q4 2025; EMEA growth gap 14.2 - 9.0 = 5.2 points; revenue 57,350 / 73,620 - 1 = -22.1% from 2020 as filed to 2021. Trailing twelve months to June 2026: revenue 67,535 - 31,519 + 33,079 = 69,095; net income 10,593 - 3,249 + 3,381 = 10,725; P/E 212,460 / 10,725 = 19.8; P/S 212,460 / 69,095 = 3.07 - growth rates and line totals. — FY2015-Q2 2026 · publ. September 2026 · source ↗
    Method: Arithmetic on figures reported in IBM's Annual Reports, Forms 10-Q, results releases and market data; operands shown in the source line.
  5. ReportedSoftware, which includes Red Hat and the software that runs on IBM's mainframes, brought in $29,962 million; Consulting $21,055 million; Infrastructure, the IBM Z mainframes, Power servers, storage and their support, $15,718 million; and Financing, loans and leases to clients buying IBM products, $737 million.
    IBM 2025 Annual Report (Form 10-K exhibit) - management discussion, consolidated financial statements and notes - management discussion of the Software segment: Hybrid Cloud, Automation, Data, Transaction Processing and ARR. — FY2025 · publ. 24 February 2026 · source ↗
  6. ReportedSoftware earned a 33.1% segment margin and Consulting 11.7%, so Software produced about 61% of segment profit on about 44% of segment revenue.
    IBM 2025 Annual Report (Form 10-K exhibit) - management discussion, consolidated financial statements and notes - management discussion of the Software segment: Hybrid Cloud, Automation, Data, Transaction Processing and ARR. — FY2025 · publ. 24 February 2026 · source ↗
  7. Moat Explorer calcSoftware earned a 33.1% segment margin and Consulting 11.7%, so Software produced about 61% of segment profit on about 44% of segment revenue.
    Moat Explorer calculation from IBM's reported figures ($ millions unless stated). Segment mix 2025: Software 29,962 / 67,472 = 44.4% of segment revenue and 9,920 / 16,364 = 60.6% of segment profit; Consulting 21,055 / 67,472 = 31.2% and 2,464 / 16,364 = 15.1%; Infrastructure 15,718 / 67,472 = 23.3% and 3,458 / 16,364 = 21.1%; Financing 737 / 67,472 = 1.1% and 521 / 16,364 = 3.2%. Segment revenue below reported revenue: 60,530 - 59,621 = 909 (2022); 61,860 - 61,229 = 631 (2023); 62,753 - 62,510 = 243 (2024); 67,535 - 67,472 = 63 (2025). Growth: revenue 67,535 / 62,753 - 1 = 7.6% (2025); 62,753 / 61,860 - 1 = 1.4% (2024); Q2 2026 17,162 / 16,977 - 1 = 1.1%; Software 25,011 / 23,629 - 1 = 5.8%, 27,085 / 25,011 - 1 = 8.3%, 29,962 / 27,085 - 1 = 10.6%; Software Q2 2026 7,761 / 7,387 - 1 = 5.1%; Consulting 20,884 / 20,058 - 1 = 4.1%, 20,692 / 20,884 - 1 = -0.9%, 21,055 / 20,692 - 1 = 1.8%, 21,055 / 20,058 - 1 = 5.0% over three years, Q2 2026 5,327 / 5,314 - 1 = 0.2%; Infrastructure 14,593 / 15,288 - 1 = -4.5%, 14,020 / 14,593 - 1 = -3.9%, 15,718 / 14,020 - 1 = 12.1%, Q2 2026 3,835 / 4,142 - 1 = -7.4%; Financing 737 / 713 - 1 = 3.4%, Q2 2026 186 / 166 - 1 = 12.0%; Transaction Processing 8,603 / 7,714 - 1 = 11.5% and 8,603 - 7,714 = 889 added 2023-2025; Hybrid Cloud 7,327 - 5,827 = 1,500 added 2023-2025; 11% to 13% of 7,327 = 806 to 952 a year; OpenShift 30% x 2.0bn = 0.6bn a year; Infrastructure Support 5,100 / 6,021 - 1 = -15.3% (2021-2025) and 4,800 / 5,100 - 1 = -5.9%; research and development 8,316 / 7,479 - 1 = 11.2%; Software segment profit 9,920 / 7,012 - 1 = 41.5%; Consulting segment profit 2,464 / 1,871 - 1 = 31.7%; financing receivables 15,193 / 11,738 - 1 = 29.4%; total debt 62.0bn - 50.9bn = 11.1bn since 2022. Shares: mainframe-linked revenue 10,618 + 8,603 + 5,100 = 24,321, and 24,321 / 67,535 = 36.0%; Hybrid Cloud 7,327 / 29,962 = 24.5% of Software; OpenShift 2.0 / 24.6 = 8.1% of software ARR; June 2026 ARR 24.6bn / 2025 Software revenue 29.962bn = 82.1%; revenue outside the United States 40,643 / 67,535 = 60.2%, so about 60%; research and development 8,316 / 67,535 = 12.3% of revenue; quantum more than 10bn / 5 years = more than 2bn a year, and 2.0 / 8.316 = 24%, about a quarter; goodwill 67,717 / 151,880 = 44.6% of total assets; goodwill plus intangibles (67,717 + 11,391) / 151,880 = 52.1%; other assets 151,880 - 67,717 - 11,391 = 72,772; HashiCorp goodwill 4,684 / 7,433 = 63.0%; Confluent goodwill 7,238 / 11,602 = 62.4%, other net assets 11,602 - 7,238 = 4,364; stock-based compensation 1,685 / 16,364 = 10.3% of segment profit; Kyndryl spin 55,179 / 73,620 - 1 = -25.0% of 2020 revenue, about a quarter. Margins: Software Q2 2025 2,296 / 7,387 = 31.1%; Consulting Q2 2025 562 / 5,314 = 10.6%; Infrastructure Q2 2026 835 / 3,835 = 21.8% and Q2 2025 965 / 4,142 = 23.3%; total segment profit Q2 2026 4,092 / 17,110 = 23.9% and Q2 2025 4,003 / 17,009 = 23.5%; Financing Q2 2026 108 / 186 = 58% (reported 58.0%); pre-tax margin 10,328 / 67,535 = 15.3%; Global Technology Services 2020 117 / 27,039 = 0.4%; gross margin Q2 2026 9,907 / 17,162 = 57.7% and Q2 2025 9,977 / 16,977 = 58.8%. Red Hat: 7,327 / 35,100 = 20.9% of consideration; pre-tax at the Software margin 0.331 x 7,327 = 2,425, and 2,425 / 35,100 = 6.9%, about 7%; after a 21% tax 6.9% x 0.79 = 5.5%; revenue needed for 8% after tax 0.08 x 35,100 / (0.331 x 0.79) = 10,738, about 10.7bn, which is 10,738 / 7,327 = 1.47 times 2025 revenue: about 3.2 years at 12.5% growth, 4.4 years at 9% and 7.8 years at 5%. Cash and capital: acquisitions plus dividends 2025 8,294 + 6,255 = 14,549, and 14,549 / 14,734 = 98.7% of free cash flow; first half 2026 acquisitions 10.5bn / free cash flow 4.8bn = 2.2 times; dividends 6,255 / 10,593 = 59.0% of net income; Consulting backlog 31.9bn / 21.055bn = 1.5 years of revenue; remaining performance obligations 71bn - 68bn = 3bn lower in six months; pension risk transfers 16 + 6 + 1.2 = 23.2bn; defined-benefit obligations 14,460 + 29,872 = 44,332 against plan assets 18,073 + 26,733 = 44,806; free cash flow guidance 14.7bn + 1.0bn = 15.7bn. Further: revenue per employee 67,535 / 264.3 thousand = about 255,500 dollars; Q2 2026 Software share of segment profit 2,502 / 4,092 = 61.1%; first-half Software 14,813 / 13,722 - 1 = 8.0%; amortisation of acquired intangibles 2,166 / 1,627 - 1 = 33.1%; free cash flow 14.7 / 6.5 = 2.3 times (2021-2025); Q2 2026 Transaction Processing 2,208 - 2,030 = 178 lower, Data 1,782 - 1,499 = 283 higher, Hybrid Cloud 1,998 - 1,796 = 202 higher, Transaction Processing above Hybrid Cloud by 2,030 - 1,998 = 32; share price 225.51 / 332.46 - 1 = -32.2% from the 52-week high; first half 2026 Hybrid Cloud 3,903 / 3,483 - 1 = 12.1%, Transaction Processing 3,963 / 4,037 - 1 = -1.8%, Hybrid Infrastructure 4,678 / 4,512 - 1 = 3.7%, Infrastructure Support 2,483 / 2,515 - 1 = -1.3%, Automation 3,692 / 3,467 - 1 = 6.5%, Data 3,256 / 2,736 - 1 = 19.0%, Financing 406 / 357 - 1 = 13.7%, Strategy and Technology 5,829 / 5,702 - 1 = 2.2%, Intelligent Operations 4,770 / 4,680 - 1 = 1.9%; Strategy and Technology Q2 2026 2,933 / 2,920 - 1 = 0.4%; Infrastructure Support 2021 share 6,021 / 14,188 = 42.4%; Infrastructure 2020 pre-tax margin 1,654 / 14,533 = 11.4%; Consulting 2020 pre-tax margin 1,034 / 16,257 = 6.4%; buybacks 2015-2019 4,609 + 3,502 + 4,340 + 4,443 + 1,361 = 18,255; Hybrid Cloud 7,327 / 67,535 = 10.8% of revenue, about a tenth; acquisitions 2023 to June 2026 5.1 + 3.3 + 8.3 + 10.5 = 27.2bn; HashiCorp net of acquired cash and securities 7,433 - 929 - 331 = 6,173; ARR 24.6 - 21.3 = 3.3bn from end-2024 to June 2026; net interest excluding Financing 1,312 / 984 - 1 = 33.3%; 2024 signings 25,103 / 20,692 = 1.21, about 21% above revenue; generative AI book 12.5 - 9.5 = 3.0bn added in Q4 2025; EMEA growth gap 14.2 - 9.0 = 5.2 points; revenue 57,350 / 73,620 - 1 = -22.1% from 2020 as filed to 2021. Trailing twelve months to June 2026: revenue 67,535 - 31,519 + 33,079 = 69,095; net income 10,593 - 3,249 + 3,381 = 10,725; P/E 212,460 / 10,725 = 19.8; P/S 212,460 / 69,095 = 3.07 - segment, gross and pre-tax margins. — FY2015-Q2 2026 · publ. September 2026 · source ↗
    Method: Arithmetic on figures reported in IBM's Annual Reports, Forms 10-Q, results releases and market data; operands shown in the source line.
  8. ReportedAbout 80% of software revenue recurs.
    IBM Form 10-Q for the quarter ended 30 June 2026 - segment results, revenue categories, RPO, the Confluent acquisition and management discussion - income statement, segment table, RPO, pensions and working capital. — Q2 2026 · publ. 23 July 2026 · source ↗
  9. ReportedInfrastructure moves in waves with each new mainframe: IBM Z revenue rose 51.7% in 2025 on the z17 launch and fell 42.0% in the second quarter of 2026.
    IBM 2025 Annual Report (Form 10-K exhibit) - management discussion, consolidated financial statements and notes - management discussion of the Infrastructure and Financing segments: IBM Z, Hybrid Infrastructure and support. — FY2025 · publ. 24 February 2026 · source ↗
  10. ReportedInfrastructure moves in waves with each new mainframe: IBM Z revenue rose 51.7% in 2025 on the z17 launch and fell 42.0% in the second quarter of 2026.
    IBM Form 10-Q for the quarter ended 30 June 2026 - segment results, revenue categories, RPO, the Confluent acquisition and management discussion - Infrastructure and Financing segment results. — Q2 2026 · publ. 23 July 2026 · source ↗
  11. ReportedRevenue was $81,741 million in 2015, but that included the managed infrastructure business IBM spun off as Kyndryl on 3 November 2021; on the restated basis, 2020 revenue was $55,179 million.
    SEC EDGAR XBRL company facts for IBM (CIK 51143) - revenue, net income and diluted EPS as filed, 2015-2025. — FY2015-FY2025 · publ. September 2026 · source ↗
  12. ReportedRevenue was $81,741 million in 2015, but that included the managed infrastructure business IBM spun off as Kyndryl on 3 November 2021; on the restated basis, 2020 revenue was $55,179 million.
    IBM 2021 Annual Report (Form 10-K exhibit 13) - separation of Kyndryl on 3 November 2021 and revenue restated for 2019 and 2020. — FY2021 · publ. February 2022 · source ↗
  13. ReportedRevenue was $81,741 million in 2015, but that included the managed infrastructure business IBM spun off as Kyndryl on 3 November 2021; on the restated basis, 2020 revenue was $55,179 million.
    IBM 2021 Annual Report (Form 10-K exhibit 13) - separation of Kyndryl on 3 November 2021 and revenue restated for 2019 and 2020. — FY2021 · publ. February 2022 · source ↗
  14. ReportedSince 2019 IBM has instead bought software: Red Hat for about $34 billion, HashiCorp for $7,433 million and Confluent for $11,602 million.
    IBM 2019 Annual Report (Form 10-K exhibit 13) - the Red Hat acquisition, its consideration and purchase price allocation, and the suspension of share repurchases. — FY2019 · publ. February 2020 · source ↗
  15. ReportedSince 2019 IBM has instead bought software: Red Hat for about $34 billion, HashiCorp for $7,433 million and Confluent for $11,602 million.
    IBM 2025 Annual Report (Form 10-K exhibit) - management discussion, consolidated financial statements and notes - financial statements and notes: income statement, cash flow, borrowings, goodwill, acquisitions, pensions and market risk. — FY2025 · publ. 24 February 2026 · source ↗
  16. ReportedSince 2019 IBM has instead bought software: Red Hat for about $34 billion, HashiCorp for $7,433 million and Confluent for $11,602 million.
    IBM Form 10-Q for the quarter ended 30 June 2026 - segment results, revenue categories, RPO, the Confluent acquisition and management discussion - Software segment results and revenue categories. — Q2 2026 · publ. 23 July 2026 · source ↗
  17. ReportedGoodwill was $67,717 million at the end of 2025.
    IBM 2025 Annual Report (Form 10-K exhibit) - management discussion, consolidated financial statements and notes - financial statements and notes: income statement, cash flow, borrowings, goodwill, acquisitions, pensions and market risk. — FY2025 · publ. 24 February 2026 · source ↗
  18. ReportedFree cash flow was $14,734 million in 2025.
    IBM 2025 Annual Report (Form 10-K exhibit) - management discussion, consolidated financial statements and notes - financial statements and notes: income statement, cash flow, borrowings, goodwill, acquisitions, pensions and market risk. — FY2025 · publ. 24 February 2026 · source ↗
  19. ReportedIBM paid $6,255 million in dividends and has raised its quarterly dividend for 31 consecutive years; it has made no share buybacks since 2019.
    IBM 2025 Annual Report (Form 10-K exhibit) - management discussion, consolidated financial statements and notes - financial statements and notes: income statement, cash flow, borrowings, goodwill, acquisitions, pensions and market risk. — FY2025 · publ. 24 February 2026 · source ↗
  20. ReportedIBM paid $6,255 million in dividends and has raised its quarterly dividend for 31 consecutive years; it has made no share buybacks since 2019.
    IBM first-quarter 2026 results release, Form 8-K exhibit 99.1 - IBM Z growth and the 31st consecutive annual dividend increase. — Q1 2026 · publ. 22 April 2026 · source ↗
  21. ReportedIBM paid $6,255 million in dividends and has raised its quarterly dividend for 31 consecutive years; it has made no share buybacks since 2019.
    IBM 2019 Annual Report (Form 10-K exhibit 13) - the Red Hat acquisition, its consideration and purchase price allocation, and the suspension of share repurchases. — FY2019 · publ. February 2020 · source ↗
  22. ReportedNet income was $10,593 million, or $11.17 a diluted share, helped by a tax benefit from resolving audit matters.
    IBM 2025 Annual Report (Form 10-K exhibit) - management discussion, consolidated financial statements and notes - financial statements and notes: income statement, cash flow, borrowings, goodwill, acquisitions, pensions and market risk. — FY2025 · publ. 24 February 2026 · source ↗
  23. ReportedNet income was $10,593 million, or $11.17 a diluted share, helped by a tax benefit from resolving audit matters.
    IBM fourth-quarter and full-year 2025 results release, Form 8-K exhibit 99.1 - IBM Z growth, generative AI book of business and 2026 expectations. — FY2025 · publ. 28 January 2026 · source ↗
  24. ReportedThe shares fell 25% on 14 July 2026, their worst day on record, when IBM warned of a mainframe shortfall.
    CNBC, IBM stock craters 25%, the worst day on record, after company issues second-quarter earnings warning. — July 2026 · publ. 14 July 2026 · source ↗
  25. ReportedAt $225.51 on 25 September 2026 IBM was worth $212.46 billion, about 20 times trailing earnings.
    IBM (IBM) statistics - market cap $212.46B at $225.51 (25 September 2026), trailing P/E 20.05, forward P/E 17.66, P/S 3.07. — September 2026 · publ. 25 September 2026 · source ↗
  26. ReportedThe largest holders are index managers: Vanguard with 92,822,090 shares, about 10.03%, BlackRock with 75,479,656 and State Street with 55,035,821.
    IBM definitive proxy statement 2026 - directors and five-percent beneficial owners (Vanguard 92,822,090 shares, 10.03%; BlackRock 75,479,656; State Street 55,035,821). — March 2026 · publ. 6 March 2026 · source ↗
  27. ReportedArvind Krishna has been chief executive since 2020 and is also chairman.
    IBM Form 10-K for 2025 - Item 1 business, competitors and strategic partners, Item 1A risk factors, executive officers. — FY2025 · publ. 24 February 2026 · source ↗
  28. ReportedThe share count has drifted up since buybacks stopped: 938,034,404 shares were outstanding in February 2026 and 942,134,390 at the end of June.
    IBM Form 10-K for 2025 - Item 1 business, competitors and strategic partners, Item 1A risk factors, executive officers. — FY2025 · publ. 24 February 2026 · source ↗
  29. ReportedThe share count has drifted up since buybacks stopped: 938,034,404 shares were outstanding in February 2026 and 942,134,390 at the end of June.
    IBM Form 10-Q for the quarter ended 30 June 2026 - segment results, revenue categories, RPO, the Confluent acquisition and management discussion - income statement, segment table, RPO, pensions and working capital. — Q2 2026 · publ. 23 July 2026 · source ↗
  30. ReportedThe market value is $212.46 billion, and the enterprise value, which adds net debt, $269.60 billion.
    IBM (IBM) statistics - market cap $212.46B at $225.51 (25 September 2026), trailing P/E 20.05, forward P/E 17.66, P/S 3.07. — September 2026 · publ. 25 September 2026 · source ↗
  31. Moat Explorer calcThe number that would falsify even the narrow verdict is return on invested capital, 12.9% in 2025 but about 10.2% at a normal 21% tax rate, against an 8% hurdle; if it falls back below that line, IBM's acquisitions are costing more than its franchise earns.
    Moat Explorer calculation, tools_roic_edgar.py on SEC EDGAR XBRL for CIK 51143: return on invested capital 20.0% (2015), 17.6% (2016), 10.5% (2017), 12.4% (2018), 9.4% (2019), 3.7% (2020), 6.0% (2021), 2.6% (2022), 10.1% (2023), 8.4% (2024), 12.9% (2025); at a flat 21% tax rate 6.7% (2024) and 10.2% (2025). — FY2015-FY2025 · publ. September 2026 · source ↗
    Method: IBM tags no OperatingIncomeLoss, so operating profit is pre-tax income from continuing operations plus interest expense (2025: 10,328 + 1,935 = 12,263). Tax at the effective rate clamped to 0-35% (IBM's 2025 rate was negative, so zero). Invested capital = total assets less current liabilities less cash, averaged over the year (2025: 151,880 - 38,658 - 13,587 = 99,635; 2024: 137,175 - 33,142 - 13,947 = 90,086; average 94,861). 12,263 / 94,861 = 12.9%; x 0.79 = 10.2%. Years to 2020 include Kyndryl. The 8% hurdle is an assumed cost of capital.
Sources
Generated September 28, 2026