New York, Jan 30, 2026, 11:38 (EST) — Regular session
- IBM dropped roughly 1.5% on Friday, pulling back after a strong rally following its earnings report the previous day
- The company projected over 5% revenue growth on a constant-currency basis for 2026, along with increased free cash flow
- Investors are eyeing if software momentum can sustain itself amid slowing Red Hat growth and rising big deal spending
Shares of International Business Machines fell Friday, retreating after a sharp rally sparked by the company’s latest quarterly earnings. Investors moved past the initial upbeat results to focus on a tougher issue: whether IBM can maintain its software-driven growth through 2026.
IBM slipped roughly 1.5% to $304.73 in late morning trading, following a rally yesterday when its results beat Wall Street estimates and management projected revenue growth exceeding 5% in constant currency for the year.
IBM’s retreat is significant as the company now stands as a key indicator for “enterprise AI” investment — not the splashy consumer gadgets, but the automation software, data infrastructure, and consulting gigs big firms deploy across data centers and cloud setups. These AI-driven budgets have cushioned the blow from patchy IT spending elsewhere in tech. Reuters
IBM reported on Jan. 28 that revenue in the fourth quarter increased, with software showing double-digit growth and infrastructure benefiting from a strong mainframe cycle. The company also projected full-year free cash flow to grow by roughly $1 billion compared to last year.
IBM highlighted its “AI book of business” hitting $12.5 billion, a figure it won’t continue to report separately after next quarter. This shift might push investors to focus more on segment growth and margin patterns for insight. Reuters
During the earnings call, CEO Arvind Krishna and CFO James Kavanaugh highlighted strong software demand and growing hybrid-cloud adoption as key growth engines. Analysts, however, questioned if IBM can maintain this momentum as it faces tougher year-over-year comparisons down the line.
IBM’s immediate focus hinges on executing deals. Back in December, it struck an $11 billion agreement to acquire data-streaming company Confluent. The move aims to bolster the data infrastructure powering enterprise AI. The acquisition is slated to close by mid-2026, subject to regulatory green lights.
But risks remain. Reuters noted that IBM’s Red Hat unit is experiencing slower growth, and the Confluent acquisition might weigh on next year’s results. The company is still working through other recent buyouts — potential trouble spots if enterprise budgets shrink or integration drags on.
For the moment, traders are focused on two main income statement metrics: if software growth remains in double digits and whether free cash flow aligns with IBM’s projection amid rising expenses for acquisitions and product development.
Investors are gearing up to track IBM’s dividend schedule closely — the tech giant announced a $1.68 quarterly payout, setting a record date for Feb. 10 and a payment date on March 10. Attention will also turn to any fresh updates on regulatory approvals and shareholder progress regarding the Confluent deal.
