New York, July 13, 2026, 10:09 (EDT)
International Business Machines NYSE:IBM was up about 1% near $290 in early trading Monday in New York after Jim Cramer gave the stock another boost. He pitched IBM as a safer bet for investors who want in on AI but want to avoid what he called “the cauldron of the data centers.” “I think this one works,” Cramer said. Insider Monkey
The 22-times multiple on that call checks out. On Monday morning, IBM traded at about 21.6 times the $13.41 a share analysts see it making in 2027. Nvidia NASDAQ:NVDA goes for about 16.4 times its next fiscal year’s earnings, Oracle NYSE:ORCL fetches 12.5 times. Both are expected to post much faster earnings growth—41% for Nvidia, 35.5% for Oracle—while IBM is seen at 7.7%. Forward price-to-earnings is just share price over expected EPS.
Accenture NYSE:ACN, which matches up closest with IBM among consulting-heavy firms, trades at roughly 9.3 times projected earnings for next year. That’s lower than IBM, but analysts expect just 5.7% growth in earnings. The companies have different fiscal calendars, so the numbers are a rough guide, not a direct match.
| Company | Current fiscal-year P/E | Next fiscal-year P/E | Forecast EPS growth |
|---|---|---|---|
| IBM | 23.3x | 21.6x | 7.7% |
| Nvidia | 23.1x | 16.4x | 41.0% |
| Oracle | 17.0x | 12.5x | 35.5% |
| Accenture | 9.9x | 9.3x | 5.7% |
The table doesn’t say IBM is a bad value. What it shows: 22 times earnings is just a number, not a reason to buy. To justify it, IBM’s software side has to outpace consulting, which is slowing down. Right now, investors are basically paying the same earnings multiple for IBM as they would for Nvidia, based on current forecasts.
Bank of America Securities NYSE:BAC analyst Wamsi Mohan is upbeat on IBM, pushing his price target up to $330 from $315. Mohan said he’s looking for a “solid quarter and guidance raise.” He’s forecasting Q2 revenue of roughly $18 billion, up 6%, and adjusted EPS at $3.05, a 9% gain. Adjusted earnings drop some acquisition and one-off costs. IBM releases results July 22 at 5 p.m. EDT. Investor’s Business Daily
Whether the forecast sticks will depend on the mix. First-quarter software revenue climbed 11% to $7.1 billion. Consulting was up 4% at $5.3 billion. Infrastructure rose 15%. Red Hat revenue increased 13%. IBM Z mainframe sales shot up 51%. Gross margin improved by 100 basis points—one percentage point. CEO Arvind Krishna said, “AI continues to be a tailwind for our global business.” IBM Newsroom
IBM’s generative-AI book at year-end topped $12.5 billion, with close to 80% of that coming from consulting and the rest from software. That “AI-booking mix” is key here. IBM’s number blends software transactions, the yearly value of new software subscriptions, and consulting signings—not a single revenue line. Consulting grew 4% in Q1, which points more to how quickly those bookings turn into revenue than to the big headline figure. 24/7 Wall St.
Susquehanna’s James Friedman has initiated on IBM at Neutral, putting the price target at $303, about 4% up from where shares closed Monday. He called the quantum-computing segment “the Quantum option,” estimating that piece at $65 a share. But automation and tough competition led him to hold back on consulting. Seeking Alpha
The risk goes both ways here. If Red Hat and IBM Z turn in another solid quarter and Confluent integration starts to pay off, Mohan might be able to lift guidance and defend the valuation. On the other hand, if AI tools speed up software modernization and cut into consulting revenue faster than IBM can backfill, earnings growth could lag while the stock still trades near Nvidia’s multiple.
IBM faces a tight test on July 22. Software needs to beat consulting on growth and margins. At 22 times earnings, the multiple is set. The “boring AI” tag doesn’t mean IBM’s cheap anymore—investors want proof it can deliver now.
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