About INTERNATIONAL BUSINESS MACHINES CORP
International Business Machines Corporation provides integrated solutions and services worldwide. The company operates through four business segments: Software, Consulting, Infrastructure, and Financing. The Software segment offers hybrid cloud platform and software solutions, such as Red Hat, an enterprise open-source solutions; software for business automation, AIOps and management, integration, and application servers; data and artificial intelligence solutions; and security software and services for threat, data, and identity. This segment also provides transaction processing software that supports clients' mission-critical and on-premise workloads in banking, airlines, and retail industries. The Consulting segment offers business transformation services, including strategy, business process design and operations, data and analytics, and system integration services; technology consulting services; and application and cloud platform services.
The Infrastructure segment provides on-premises and cloud-based server and storage solutions for its clients' mission-critical and regulated workloads; and support services and solutions for hybrid cloud infrastructure, as well as remanufacturing and remarketing services for used equipment. The Financing segment offers lease, installment payment, loan financing, and short-term working capital financing services. The company was formerly known as Computing-Tabulating-Recording Co. International Business Machines Corporation was incorporated in 1911 and is headquartered in Armonk, New York.
IBM operates in the Manufacturing | Computer Hardware | headquartered in Armonk, New York | approximately 311,300 employees | led by CEO Arvind Krishna.
The $261.4B question: What happens when a company this good becomes this expensive?
In the rarefied air of Silicon Valley valuations, INTERNATIONAL BUSINESS MACHINES CORP sits at a peculiar crossroads. The company that once defined an era now finds itself redefining another — and investors are paying a premium for the privilege of coming along.
At $261.4B in market capitalization, INTERNATIONAL BUSINESS MACHINES CORP (IBM) currently ranks #221 in our quantitative model, with a composite score of 76.1/100. That places it firmly in "Strong Buy" territory — our highest conviction rating.
But here's the thing about stocks priced for perfection: They leave no room for error.
The Numbers That Matter
Let's start with what's undeniably true. Our 6-factor model gives IBM the following scores:
| Factor | Score | Weight | Assessment |
|---|---|---|---|
| Quality | 82/100 | 30% | Exceptional |
| Value | 60/100 | 15% | Fair |
| Momentum | 57/100 | 25% | Steady |
| Investment | 32/100 | 10% | Low |
| Stability | 85/100 | 10% | Fortress |
| Short Interest | 57/100 | 10% | Normal |
The quality score of 82/100 is the headline here. It reflects profitability metrics that would make most CFOs weep with envy:
- ROE: 30.6%
- Net Margin: 10.7%
- Gross Margin: 57.3%
These aren't just good numbers. They're the kind of numbers that make IBM a "must-own" stock for institutional portfolios.
The Bull Case
"If you could design a business in a laboratory, it would look something like IBM."
The bull case writes itself:
- Quality is persistent. Academic research shows high-quality stocks outperform by 4-6% annually over long periods. IBM is quality defined.
- Momentum is real. With a momentum score of 57/100, the stock has been recognized by the market — and momentum tends to persist.
- The moat is deep. Companies with these margins don't lose them easily. The competitive position is entrenched.
The Bear Case
But here's what keeps value investors up at night:
- Valuation compression risk. At current levels, the stock is priced for continued perfection. Any stumble — a missed quarter, a competitive threat, a macro slowdown — could compress the multiple from 33.1x to the low 20s. That's a 20-30% decline without anything fundamentally "wrong."
- The crowded trade problem. When everyone owns a stock, who's left to buy? Momentum works until it doesn't.
- Mean reversion. Trees don't grow to the sky. At some point, growth decelerates.
The Valuation Framework
| Scenario | Assumption | Fair Value | Upside/Downside |
|---|---|---|---|
| Bear | Multiple compression to 20x | -20% | Downside |
| Base | Current trajectory continues | +10-15% | Modest upside |
| Bull | Momentum accelerates | +30-40% | Significant upside |
The risk-reward is ... fine. Not exceptional. Not terrible. Just fine.
The Bottom Line
INTERNATIONAL BUSINESS MACHINES CORP is exactly what it appears to be: a high-quality business with strong momentum trading at a premium price. Whether that's attractive depends entirely on what kind of investor you are.
For long-term, buy-and-hold investors, IBM is a core holding. For value investors or short-term traders, look elsewhere.
The company is priced for perfection — and in markets, as in life, perfection is a fragile thing.
⭐⭐⭐⭐⭐ Rating: 5-Star Strong Buy
Score: 76.1/100 | Rank: #221 of 3,571 stocks
Sector: Technology
This analysis reflects the views of Blank Capital Research as of February 16, 2026. It is not investment advice. Past performance does not guarantee future results.