IBM Tumbles as Analyst Downgrades to Sell with 9% Pullback Expected

Despite recent price declines, International Business Machines (IBM) is still rated as a Sell by an analyst who has covered the company since April 2025. The analyst notes that IBM's Q2 revenue growth slowed to around 1% year-over-year, with full-year guidance cut to 4-5%. This slowdown in revenue growth is attributed to customer budget pressures from elevated AI component costs, which are likely to persist through 2027.

The analyst also points out that software growth has stagnated, undermining the investment thesis for IBM. With EV/EBITDA multiples barely compressing and fair value at around 12x, the analyst expects a probable 9% pullback in IBM shares over the next 1-2 quarters.