IBM stock has seen extremely strong gains of 160% from levels of $100 in early January 2021 to around $260 in early March 2025, vs. an increase of about 55% for the S&P 500 over this roughly four-year period.
IBM is one of a handful of stocks that have increased their value in each of the last 4 years, but that still wasn't enough for it to consistently beat the market. Returns for the stock were 16% in 2021, 11% in 2022, 22% in 2023, and 39% in 2024. In comparison, returns for the S&P 500 have been 27% in 2021, -19% in 2022, 24% in 2023, and 23% in 2024 — indicating that IBM underperformed the S&P in 2021 and 2023.
IBM's Q4 2024 results were better than expected, with revenue rising by 1% year-over-year to $17.6 billion, while earnings came in at $3.92 per share. Revenue from the software business rose 10% year-over-year to $7.92 billion. The company also said that its book of business for generative AI solutions had crossed $5 billion, up from about $3 billion in Q3.
In late 2021, IBM completed the separation of its managed infrastructure services unit into a new public company called Kyndryl. The transaction will allow IBM to focus on high-growth and higher-margin areas such as artificial intelligence and cloud services while unlocking some value for IBM shareholders.
Below are key drivers of IBM's value:
For additional details, select a driver above or a division from the interactive Trefis split for IBM at the top of the page.
IBM is one of the largest technology companies in the world, focused on providing software, consulting services, and IT infrastructure. IBM primarily caters to large and medium-sized businesses worldwide.
IBM's Software business includes its hybrid cloud platform, which provides AI-driven software that helps customers operate, manage, and optimize IT resources and business processes within hybrid, multi-cloud environments. The software business also sells transaction processing software that supports workloads in industries such as banking, airlines, and retail.
IBM's Consulting segment employs over 150,000 professionals in more than 150 countries and provides industry expertise in business transformation and technology implementation. IBM's consulting business works with clients to design and build open, hybrid cloud architectures and optimize workflows and business processes.
IBM's Infrastructure division sells IBM Z, the company's mainframe solution, as well as distributed infrastructure solutions such as the IBM Cloud Infrastructure-as-a-Service (IaaS) offering.
We believe that IBM's Software division is its most valuable segment for a couple of reasons.
An increasing mix of IBM's software business is based on software as a service. These services are recurring in nature as a client tends to re-sign with an existing service provider. As a result, contracts and services are renewed on expiry. We believe IBM would be able to maintain steady cash flows, even in tough times, in a segment where it is the market leader.
IBM's Software business is increasingly focused on the cloud and AI, which are fast-growing technology market segments. Margins for these software products are also likely to be higher, translating into a higher contribution to IBM's longer-term profit and cash flows.