Buy the Dip in IBM Stock After Q1 Earnings?

IBM's IBM stock fell 6% in today’s trading session despite beating its first-quarter expectations after-market hours on Wednesday and maintaining its full-year revenue guidance.

That said, let’s see if the post-earnings selloff is a buying opportunity, considering IBM stock is still up +4% year to date and has impressively outperformed many of its tech peers, with the Nasdaq down 11% in 2025.

IBM’s Favorable Q1 Results

Having a focused strategy around hybrid cloud and AI, IBM CEO Arvind Krishna stated the company is off to a strong start to the year, driven by solid revenue growth, profitability, and cash flow generation.

IBM’s Q1 sales came in at $14.54 billion, eclipsing estimates of $14.44 billion and rising from $14.46 billion in the comparative quarter. On the bottom line, Q1 EPS of $1.60 was down from $1.68 a year ago but beat expectations of $1.42 per share by 12%. Furthermore, IBM generated a multi-year high for Q1 free cash flow at $2 billion.

Notably, IBM has exceeded the Zacks EPS Consensus for nine consecutive quarters with an average earnings surprise of 7.9% in its last four quarterly reports.

IBM Maintains its Full-Year Guidance

Reassuringly, IBM maintained its full-year guidance for accelerating revenue growth of 5% or more, which came in above projections of $65.09 billion or roughly 4% growth. Based on Zacks estimates, IBM’s top line is forecasted to expand another 5% next year to $68.73 billion. 

IBM also maintained its full-year free cash flow guidance of $13.5 billion, which would be a slight uptick from $12.95 billion in 2024.

Monitoring IBM’s P/E Valuation

Trading around $230, IBM stock is at a 22.8X forward earnings multiple. While this is near the benchmark S&P 500, IBM does trade at a noticeable premium to its Zacks Computer-Integrated Systems Industry average of 11.3X, with some notable peers being Advanced Micro Devices AMD and Micron Technology MU.

Bottom Line

For now, IBM stock lands a Zacks Rank #3 (Hold). To that point, more upside from here may largely depend on what is hopefully a trend of positive earnings estimate revisions in the coming weeks, as analysts digest IBM’s favorable outlook despite tariff concerns impacting the broader market.

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This article originally published on Zacks Investment Research (zacks.com).

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