Buy, Hold, or Sell: IBM Just Shed 16% Is It a Clear Buy at $268? Alex Sirois June 16, 2026 4 min read IBM NVDA Quick Read IBM posted its highest Q1 free cash flow in a decade as Software grew 11% and Infrastructure surged 15%, making the selloff look macro-driven. IBM trades at a forward P/E of 22 but has shed 16% from its January peak as Kevin Warsh's Fed tightening compressed enterprise tech multiples broadly.
IBM's $12.5 billion GenAI book and 31 consecutive dividend increases support the bull case, while Consulting's 1% constant-currency growth is the key risk to watch. Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and IBM didn't make the cut. Grab the names FREE today.
International Business Machines (NYSE:IBM) looks attractively valued at $268.71, with the setup sharpening on any retest of $260. The stock has pulled back meaningfully from its January peak near $314.84 while the broader market grinds higher, opening a gap between price and fundamentals that has not been this wide in years. Sundry Photography / iStock Editorial via Big Blue runs four segments: Software, Consulting, Infrastructure, and Financing.
Software and the IBM Z mainframe franchise drive results; Consulting lags. The selloff coincided with a hawkish shift at the Federal Reserve under Kevin Warsh, accelerating quantitative tightening that compressed multiples across enterprise tech regardless of company-specific execution. IBM just posted its highest first-quarter free cash flow in a decade, yet the market treats it like a stalled legacy name.
Why the Selloff Looks Like a Gift Q1 2026 was clean. Revenue of $15.92 billion beat by 1.70%, EPS of $1.91 beat by 5.45%, and free cash flow of $2.22 billion rose 13% YoY. Software grew 11.3%, Infrastructure climbed 15.3% on a 51% surge in IBM Z, and operating income jumped 20.62% YoY.
Valuation is unusually reasonable. Trailing P/E sits at 24, forward P/E at 22, with a 2.44% dividend yield backed by the 31st consecutive year of dividend increases. The generative AI book of business cleared $12.5 billion inception-to-date at the end of 2025, and Consulting GenAI alone has eclipsed $4 billion ARR.
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