"IBM's Q1 2026 earnings report showed software growth at 11.3%, with Red Hat increasing by 13% and Data by 19%. However, Consulting revenue only grew by 1%, which is concerning as it holds a significant portion of the generative AI market."
"Despite a solid earnings report, IBM's stock fell 9.47% to $228, reflecting investor anxiety over decelerating revenue growth and the potential impact of generative AI on its software and consulting businesses."
"Jefferies adjusted its price target for IBM from $370 to $320, indicating a cautious outlook, while the consensus target of $296.33 suggests potential upside from the current trading price."
IBM reported strong Q1 2026 earnings, with a solid B rating. Software revenue grew 11.3%, driven by Red Hat and Data. However, Consulting revenue only grew 1%, raising concerns about generative AI competition. The stock dropped 9.47% after opening at $228, erasing previous gains. Jefferies lowered its price target from $370 to $320, while the consensus target remains at $296.33. A forward P/E of 21x suggests the stock is not overvalued, but Q2 must show Consulting growth to alleviate AI-related concerns.
Read at 24/7 Wall St.
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