What is IBM's intrinsic value?

TickerWorth's blended fair value for International Business Machines Corporation (IBM) is $152.64 per share, versus a market price of $232.14 (52% above fair value).

Is IBM overvalued or undervalued?

On our blended fair value IBM looks overvalued vs fair value at $232.14. This is an educational estimate, not advice.

What discount rate is used for IBM?

A WACC of 8.1% and a terminal growth rate of 2.5%.

Is International Business Machines stock undervalued?

TickerWorth's fair value for International Business Machines Corporation (IBM) is $152.64 against a market price of $232.14. Our read: 52% above fair value. This is a model estimate, not investment advice.

International Business Machines (IBM) DCF valuation and fair value

Our fair value for International Business Machines Corporation (IBM) is $152.64, built on a 8.1% discount rate (WACC) and 2.5% terminal growth. It blends our discounted-cash-flow model with other valuation lenses. Every assumption is listed on this page with its source.

What growth is priced into International Business Machines stock?

Today's price implies revenue growth of 9.5% a year for 5 years; our model assumes 3.9% a year on average over the same horizon. This is a reverse DCF: it holds our cash-flow model's other inputs and solves for the revenue growth that makes the model equal today's price of $232.14. A model estimate, not investment advice.

International Business Machines (IBM) insider trading

The most recent insider filing (SEC Form 4) for International Business Machines Corporation (IBM): Thomas Robert David, Senior Vice President, open-market sale on 2026-08-26. The latest filings are listed on this page. A disclosure, not a signal to trade.

IBM · Intrinsic value

Is International Business Machines Corporation (IBM) overvalued or undervalued?

Name: International Business Machines Corporation (IBM) DCF intrinsic value
Creator: TickerWorth

International Business Machines Corporation (IBM) trades at the delayed market price of $232.14 a share. That price already implies revenue growth of 9.5% a year for 5 years. TickerWorth's fair value is $152.64 a share (52% above fair value), as of Oct 19, 2026. It is a model estimate, and every input behind it is sourced below.

Model by Miraaj Patel · generated from a hand-researched model · Updated Oct 19, 2026 · How these pages are made

Open full IBM analysis

Is IBM overvalued?

Fair value: $152.64
Market price: $232.14
Downside to fair value: 34.2%
Verdict: 52% above fair value

Price as of 19 Oct 2026, 13:15 UTC · Prices are delayed.

Fair value against the delayed market price: 52% above fair value.

Reverse DCF: Today's price implies revenue growth of 9.5% a year for 5 years; our model assumes 3.9% a year on average over the same horizon.

What is IBM's TickerWorth Score?

D40/100

Scores lower than most companies we compare it with

Compared with Technology companies in US

Its strongest point: looks cheap on the numbers. Its weakest: balance sheet looks stretched.

Value · 65 of 100
Cheaper than 65% of Technology companies in US
Price vs worth · 23 of 100
Quality · 63 of 100
More profitable than 63% of Technology companies in US
Financial health · 12 of 100
Financially stronger than 12% of Technology companies in US
Growth · 14 of 100
Growing faster than 14% of Technology companies in US
Momentum · 33 of 100
Outperformed 33% of Technology companies in US over the past year

Confidence: High confidence · Scored 19 Oct 2026, 13:15 UTC

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Where the numbers come from

Hand-researched model

What the modeller flagged

YEAR-1 FCF IS ~31% BELOW IBM'S LAST REPORTED FCF ($10.1B modeled vs $14,734M reported) - beyond the 20% threshold, so stated explicitly. The gap is fully decomposable and entirely deliberate: $2,737M of acquired-intangible amortization that is NOT added back, plus ~$1.6B from normalizing tax to 15% against IBM's realized ~0%. Applying this same treatment to FY2025 itself yields $9,896M, so the model is internally consistent - it is not a forecast error.
TERMINAL VALUE IS ~78% OF ENTERPRISE VALUE. High even by DCF standards. The five explicit years contribute only ~22% of the answer, so this valuation is a bet on the steady state, not on the forecast period.
Beta normalized UP from a published 0.675 to 0.85, and cost of debt uses the ~5.0% marginal rate rather than IBM's ~3.2% average. Both choices lower the value.
KNOWN GAP - ANNOUNCED CAPITAL COMMITMENTS NOT IN THE CAPEX LINE. Capex is held at 2.39% of revenue, but IBM has announced roughly $16B+ of forward commitments that postdate the FY2025 balance sheet: quantum '>$10B over the next five years' (Reg FD 8-K 2026-05-28), the Lightwell $5B commitment (GA 2026-07-08), and ~$1B of IBM cash for the Anderon quantum foundry. Much of this is R&D and engineering headcount already inside the 16.08% EBIT margin rather than incremental capex, and the quantum figure explicitly spans R&D, ecosystem and M&A as well as capex - so it is NOT simply additive. But if even $2B/yr proves to be incremental hard capex, that is ~3% of revenue and would reduce the value materially. Sized and flagged, not modeled.
CREDIT RATING ON NEGATIVE WATCH. IBM is A-/A3/A- (S&P/Moody's/Fitch), confirmed unchanged in the Q1-2026 10-Q, with no ratings-trigger covenants. But S&P moved the outlook to NEGATIVE on 2025-12-08 over the Confluent deal and reconfirmed it 2026-01-29, with an explicit trigger of leverage sustained above 2.5x. After the July shortfall a one-notch downgrade to BBB+ is a live sensitivity that would push the 5.0% pre-tax cost of debt toward ~5.5% and lower the value. Not modeled; the base case assumes the single-A rating holds.
PENSION CHECKED AND DELIBERATELY NOT ADJUSTED. IBM reports a net underfunded retirement position of $2,283M at FY2025 year-end, which looks like a missing net-debt item but is not one. Decomposed: the defined-benefit PENSION plans are net POSITIVE at +$474M (US Qualified PPP is 137% funded, worldwide qualified DB 116% funded); the entire deficit is retiree medical (OPEB, -$2,757M) plus nonqualified plans that are unfunded by design and behave like deferred comp. IBM states it is 'not legally required to make any contributions to the U.S. defined benefit pension plans' in 2026, with only ~$100M of required qualified-plan contributions and ~$1.4B of total retirement cash cost already sitting inside operating expenses. The $4,866M US surplus is a trapped asset - recoverable only through reduced future funding - so it is carried at zero rather than added to equity value. NB: FY2024's GAAP base carries a $3.1B pension settlement charge, which is why FY2024 is not used as the base year.
The base-year EBIT margin is a derived figure, not a reported line - IBM publishes no operating-income line. The build is documented in the ebit_margin source note and cross-checks against tagged gross profit.
SBC of $1,715M (2.5% of revenue) is already expensed inside the GAAP EBIT build, so no further deduction is taken. The resulting dilution is instead captured by using the higher weighted-diluted share count.
THE 48-HOUR SHELF LIFE HAS BEEN HONOURED. The prior file ended 'IBM reports final Q2 results and resets FY2026 guidance on 2026-07-22. Re-run then.' This is that re-run, done 2026-08-31 against the 2026-07-22 release and the Q2 10-Q. Next hard checkpoint is Q3 2026.
MARGIN PATH IS THE SOFTEST INPUT AND IT LEANS ON SEASONALITY. Year 1's 16.1% assumes IBM's second half repeats last year's 18.91% EBIT margin. That is how IBM has behaved, but it is one year of shape doing a lot of work, and H1 2026 delivered only +16bp of YoY improvement while R&D grew at twice the rate of revenue. If H2 2026 does not carry its usual weight, Year 1 is too high.

IBM DCF valuation: what the price assumes

At a recent price of $232.14, International Business Machines Corporation (IBM) trades 52% above TickerWorth's blended fair value of $152.64 per share — a discounted-cash-flow model cross-checked against peer multiples and asset value — meaning the market currently prices IBM overvalued vs our estimate of what the business is intrinsically worth. Our fair value sits below the market, an implied -34.2% move to close the gap if the business performs in line with our assumptions. This is an educational model, not a price target or a recommendation — the value moves with the inputs, which you can test yourself using the WACC slider below.

Read the full reasoning

One of the lenses behind that blended figure is a discounted-cash-flow model, which on its own values IBM at about $174.07 per share. The rest of this page walks through that DCF — its assumptions, reverse-DCF and discount-rate sensitivity — because it is the auditable anchor of the blend.

The valuation discounts International Business Machines Corporation's projected free cash flows at a weighted-average cost of capital (WACC) of 8.1%, with a long-run terminal growth rate of 2.5%. About 78% of the enterprise value comes from the terminal value — the portion beyond the explicit forecast window — which is typical for a stable, cash-generative business and a reminder that small changes in the discount rate or terminal growth assumption swing the intrinsic value meaningfully.

Running the DCF in reverse — solving for the growth the current price already assumes — the market is implying roughly 9.5% annual revenue growth for IBM. Our base case instead compounds to about 3.9% a year over the same forecast, so the market is pricing in materially faster growth than our base case. The reverse-DCF is a quick sanity check: it reframes 'is this stock cheap?' as 'do I believe the growth the price requires?' rather than arguing over a single point estimate of fair value.

Sensitivity matters more than any single number. Across a reasonable band of discount-rate assumptions, IBM's modeled DCF value ranges from about $111.22 to $338.15 per share. If that range still sits below today's price, the market is optimistic relative to the model across the whole band; if it brackets the price, the stock is roughly fairly valued on our assumptions. Use the interactive slider to see exactly where your own cost-of-capital view lands.

How to read this page: the DCF fair value is what International Business Machines Corporation would be worth if its cash flows grow as modeled and are discounted at the stated WACC. The assumptions table shows every input and its source; the reverse-DCF shows what the market believes; the sensitivity band shows how fragile the answer is. None of this is investment advice — it is a transparent, auditable framework for forming your own view of IBM's intrinsic value. Figures update as new filings and prices come in.

Every input behind IBM's DCF

Input	Value	Source
Base-year revenueIBM FY2025 10-K (accession 0000051143-26-000010): us-gaap:Revenues, FY2025. +7.6% vs FY2024 $62,753M (+6% constant currency). Growth was substantially acquisition-driven. UNCHANGED as the base — the DCF grows this figure by forecast.revenue_growth, so the new quarter belongs in the forecast. CROSS-CHECK: H1 2026 revenue was $33,079M, +4.95% on H1 2025.	$67,535,000,000	IBM FY2025 10-K (accession 0000051143-26-000010): us-gaap:Revenues, FY2025. +7.6% vs FY2024 $62,753M (+6% constant currency). Growth was substantially acquisition-driven. UNCHANGED as the base — the DCF grows this figure by forecast.revenue_growth, so the new quarter belongs in the forecast. CROSS-CHECK: H1 2026 revenue was $33,079M, +4.95% on H1 2025.
Base EBIT marginIBM FY2025 10-K (accession 0000051143-26-000010): IBM does NOT tag us-gaap:OperatingIncomeLoss and reports no operating-income line. Derived: gross profit $39,297M - R&D $8,316M - SG&A $20,123M = $10,858M / revenue $67,535M = 16.08%. Cross-check: revenue $67,535M - cost of revenue $28,239M = $39,296M, ties to the tagged gross profit within rounding. This EXCLUDES the ~$1,405M of net other income (IP income, interest income, pension credits) that sits between this line and the $10,328M GAAP pretax figure - excluded deliberately, because interest income is already captured in the net-debt bridge and pension credits are non-cash. CROSS-CHECK ON THE SAME DERIVATION, H1 2026: gross profit $18,857M - R&D $4,485M - SG&A $10,071M = $4,301M / $33,079M = 13.00%, against 12.84% for H1 2025. THE SEASONALITY IS THE POINT AND IT IS LARGE: FY2025's 16.08% is a full year whose second half ran 18.91%. A reader comparing H1's 13.0% with the 16.1% forecast would think the model optimistic; it is not, it is the same shape IBM printed last year. The YoY change in the comparable half is +16bp.	16.1%	IBM FY2025 10-K (accession 0000051143-26-000010): IBM does NOT tag us-gaap:OperatingIncomeLoss and reports no operating-income line. Derived: gross profit $39,297M - R&D $8,316M - SG&A $20,123M = $10,858M / revenue $67,535M = 16.08%. Cross-check: revenue $67,535M - cost of revenue $28,239M = $39,296M, ties to the tagged gross profit within rounding. This EXCLUDES the ~$1,405M of net other income (IP income, interest income, pension credits) that sits between this line and the $10,328M GAAP pretax figure - excluded deliberately, because interest income is already captured in the net-debt bridge and pension credits are non-cash. CROSS-CHECK ON THE SAME DERIVATION, H1 2026: gross profit $18,857M - R&D $4,485M - SG&A $10,071M = $4,301M / $33,079M = 13.00%, against 12.84% for H1 2025. THE SEASONALITY IS THE POINT AND IT IS LARGE: FY2025's 16.08% is a full year whose second half ran 18.91%. A reader comparing H1's 13.0% with the 16.1% forecast would think the model optimistic; it is not, it is the same shape IBM printed last year. The YoY change in the comparable half is +16bp.
Forecast revenue growthESTIMATEAssumption — TickerWorth's 5-year explicit forecast	4% → 4% → 4% → 4% → 3%	ESTIMATEAssumption — TickerWorth's 5-year explicit forecast
Risk-free rateUS 10Y Treasury constant maturity: 4.67% at 2026-08-27, the latest published observation. Was 4.57% at 2026-07-16.	4.7%	US 10Y Treasury constant maturity: 4.67% at 2026-08-27, the latest published observation. Was 4.57% at 2026-07-16.
BetaESTIMATEAssumption — normalized estimate: Published betas cluster 0.67-0.71 (Yahoo 0.68 5Y-monthly, stockanalysis 0.67, Finviz 0.71). Normalized UP to 0.85 - i.e. this override is CONSERVATIVE (raises WACC, lowers value), the opposite of the CAT case. Rationale: a 5-year MONTHLY regression has ~60 observations, so the 2026-07-14 repricing is a single post-event point and is structurally almost absent from the published figure - those betas describe the pre-crash company. Two further distortions: the 2021 Kyndryl spin broke the return series, and IBM's historically defensive high-dividend profile suppresses measured beta relative to a now software/AI-weighted mix. 0.85 sits between the published figure and IBM's longer-run ~0.9-1.0 band. KNOWN REFINEMENT: the rigorous fix is a bottom-up beta unlevered from software/IT-services comparables and relevered at IBM's capital structure; 0.85 is a judgment stand-in for that. Each 0.1 of beta is worth roughly $16/share, and the reverse DCF shows that simply accepting the published 0.675 would close the gap almost entirely. REVIEWED 2026-08-31: the published beta is now 0.705 (was 0.675-0.71). The 0.85 normalization is HELD — it still raises the discount rate and lowers the value.	0.85	ESTIMATEAssumption — normalized estimate: Published betas cluster 0.67-0.71 (Yahoo 0.68 5Y-monthly, stockanalysis 0.67, Finviz 0.71). Normalized UP to 0.85 - i.e. this override is CONSERVATIVE (raises WACC, lowers value), the opposite of the CAT case. Rationale: a 5-year MONTHLY regression has ~60 observations, so the 2026-07-14 repricing is a single post-event point and is structurally almost absent from the published figure - those betas describe the pre-crash company. Two further distortions: the 2021 Kyndryl spin broke the return series, and IBM's historically defensive high-dividend profile suppresses measured beta relative to a now software/AI-weighted mix. 0.85 sits between the published figure and IBM's longer-run ~0.9-1.0 band. KNOWN REFINEMENT: the rigorous fix is a bottom-up beta unlevered from software/IT-services comparables and relevered at IBM's capital structure; 0.85 is a judgment stand-in for that. Each 0.1 of beta is worth roughly $16/share, and the reverse DCF shows that simply accepting the published 0.675 would close the gap almost entirely. REVIEWED 2026-08-31: the published beta is now 0.705 (was 0.675-0.71). The 0.85 normalization is HELD — it still raises the discount rate and lowers the value.
Terminal growthESTIMATEAssumption — house default: House default 2.5% (roughly long-run nominal GDP), kept for comparability with every other company in this tracker. FLAG: this is generous relative to IBM's own history - revenue went from $57.4B (FY2021) to $67.5B (FY2025), and most of that came from acquisitions, not organic growth. IBM revenue was ~$80B+ a decade ago. A 2.0% terminal rate takes ~$15/share off. Must remain < WACC of 7.86%.	2.5%	ESTIMATEAssumption — house default: House default 2.5% (roughly long-run nominal GDP), kept for comparability with every other company in this tracker. FLAG: this is generous relative to IBM's own history - revenue went from $57.4B (FY2021) to $67.5B (FY2025), and most of that came from acquisitions, not organic growth. IBM revenue was ~$80B+ a decade ago. A 2.0% terminal rate takes ~$15/share off. Must remain < WACC of 7.86%.
Diluted sharesIBM Q2 2026 10-Q (accession 0000051143-26-000078, filed 2026-07-23): H1 2026 weighted-average diluted shares 952,697,295 (Q2 alone 953,263,534); was 948.7M on FY2025. The diluted count is used rather than the 942.1M outstanding because that is how this model carries SBC dilution — and note the count is RISING: IBM issues more than it retires.	953M	IBM Q2 2026 10-Q (accession 0000051143-26-000078, filed 2026-07-23): H1 2026 weighted-average diluted shares 952,697,295 (Q2 alone 953,263,534); was 948.7M on FY2025. The diluted count is used rather than the 942.1M outstanding because that is how this model carries SBC dilution — and note the count is RISING: IBM issues more than it retires.
Market priceDelayed quote · as of 2026-10-19 13:15 UTC	$232.14	Delayed quote · as of 2026-10-19 13:15 UTC

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What does International Business Machines Corporation do?

What does it do?

International Business Machines Corporation, together with its subsidiaries, provides integrated solutions and services in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. It operates through Software, Consulting, Infrastructure, and Financing segments. It operates in the Information Technology Services industry (Technology sector), headquartered in United States. The company employs roughly 264,300 people.

How does it make money?

The business turns $69.1B in annual revenue into profit. Out of every $100 of sales, about $17 is left as operating profit (operating margin of 16.5%), after a 58% gross margin on the products/services it sells. After all costs, taxes and interest, 15.5% of revenue becomes bottom-line net profit.

Is it financially healthy?

Financially it looks stretched: carries moderate debt (1.9× equity), may struggle to cover its short-term bills (0.8× current ratio), and is currently profitable.

Who at IBM filed insider trades?

Recent insider filings for International Business Machines Corporation
Date	Insider	Relationship	What happened	Value	Filing
26 Aug 2026	Thomas Robert David	Senior Vice President	Open-market sale	$5,758,087.50	Form 4 for Thomas Robert David (opens sec.gov in a new tab)
1 Jul 2026	Robinson Anne	Senior Vice President	Option exercise	—	Form 4 for Robinson Anne (opens sec.gov in a new tab)
1 Jul 2026	Robinson Anne	Senior Vice President	Shares withheld (tax)	$933,003.15	Form 4 for Robinson Anne (opens sec.gov in a new tab)
1 Jul 2026	Robinson Anne	Senior Vice President	Option exercise	—	Form 4 for Robinson Anne (opens sec.gov in a new tab)
1 Jul 2026	Robinson Anne	Senior Vice President	Shares withheld (tax)	$223,932.23	Form 4 for Robinson Anne (opens sec.gov in a new tab)
4 Jun 2026	Fehring Nicolas A.	VP, Controller	Gift	—	Form 4 for Fehring Nicolas A. (opens sec.gov in a new tab)

A disclosure, not a signal to trade. Source: SEC EDGAR (Form 4).

Common questions

What is IBM's intrinsic value?
TickerWorth's blended fair value for International Business Machines Corporation (IBM) is $152.64 per share, versus a market price of $232.14 (52% above fair value).
Is IBM overvalued or undervalued?
On our blended fair value IBM looks overvalued vs fair value at $232.14. This is an educational estimate, not advice.
What discount rate is used for IBM?
A WACC of 8.1% and a terminal growth rate of 2.5%.
Is International Business Machines stock undervalued?
TickerWorth's fair value for International Business Machines Corporation (IBM) is $152.64 against a market price of $232.14. Our read: 52% above fair value. This is a model estimate, not investment advice.
International Business Machines (IBM) DCF valuation and fair value
Our fair value for International Business Machines Corporation (IBM) is $152.64, built on a 8.1% discount rate (WACC) and 2.5% terminal growth. It blends our discounted-cash-flow model with other valuation lenses. Every assumption is listed on this page with its source.
What growth is priced into International Business Machines stock?
Today's price implies revenue growth of 9.5% a year for 5 years; our model assumes 3.9% a year on average over the same horizon. This is a reverse DCF: it holds our cash-flow model's other inputs and solves for the revenue growth that makes the model equal today's price of $232.14. A model estimate, not investment advice.
International Business Machines (IBM) insider trading
The most recent insider filing (SEC Form 4) for International Business Machines Corporation (IBM): Thomas Robert David, Senior Vice President, open-market sale on 2026-08-26. The latest filings are listed on this page. A disclosure, not a signal to trade.