International (IBM) | News Based Sentiment Analysis

• IBM started September strong, reporting Q2 2025 revenue of $16.98 billion on September 3rd, a 7.7% year-over-year increase that exceeded expectations of $16.58 billion. This positive momentum led to a reaffirmation of their full-year 2025 revenue growth expectation of at least 5% and a raised free cash flow forecast to over $13.5 billion.
• Building on this financial success, IBM is seeing significant growth in its AI business, with generative AI now exceeding $7.5 billion as of September 3rd. Internally, their AI-powered virtual assistant, AskHR, has already handled over 11 million employee interactions, resolving 94% of common inquiries, showcasing the practical application of their AI investments.
• However, a study commissioned by IBM revealed a growing trend of “Shadow AI” use in Canadian workplaces, with 79% of workers using AI tools but only 25% relying on enterprise-grade solutions as of September 3rd. This poses risks like data leaks and could cost Canadian companies approximately CA$308,000 per data breach, highlighting a potential security challenge.
• Investor sentiment appears mixed, with analyst price targets ranging from $200 to $325 on September 3rd. While Wedbush maintains an "Outperform" rating with a $325 target, JPMorgan Chase has a more conservative $290 target, indicating differing views on the company’s future prospects.
• On September 8th, IBM’s stock closed up 2.99%, outperforming the S&P 500 (up 0.21%), Dow (up 0.25%), and Nasdaq (up 0.45%), and gained 2.58% over the past month. This positive stock performance followed a jump of 3% on September 9th, driven by Broadcom Inc.'s strong third-quarter fiscal 2025 earnings.
• Institutional investors continue to show confidence in IBM, with IFM Investors Pty Ltd increasing its holdings by 1.7% during the first quarter, owning shares valued at $43.18 million as of September 11th. SCS Capital Management LLC also acquired a new stake worth approximately $2.67 million, and Vanguard Group Inc. lifted its position by 1.4%, now owning shares valued at $23.16 billion.
• Looking ahead, analysts expect IBM to post earnings of $2.43 per share for its upcoming earnings report on September 9th, representing a 5.65% year-over-year growth. Revenue is forecasted to be $16.08 billion, indicating a 7.44% growth compared to the same quarter last year.
• IBM recently declared a quarterly dividend of $1.68 per share, payable on September 10th, with a dividend yield of 2.6% as of September 11th. This demonstrates a continued commitment to returning value to shareholders.

The Investment Story: September showcased IBM’s robust financial performance and AI advancements, but also highlighted emerging risks related to unsanctioned AI usage and fluctuating investor sentiment. The company is clearly investing in future technologies while maintaining a commitment to shareholder returns.

What It Means for Investors: The strong Q2 results and raised free cash flow forecast are encouraging, but the software revenue miss and the rise of "Shadow AI" introduce caution. IBM’s diversified portfolio and commitment to shareholder value provide a solid foundation, but investors should remain mindful of the evolving competitive landscape.

Looking Ahead: Investors should monitor continued progress in IBM’s generative AI business and the adoption of enterprise-grade AI tools. Addressing the risks associated with "Shadow AI" and observing institutional investment trends will also be important.

The Bottom Line: IBM is positioning itself as a leader in the next wave of technology, but execution and risk management will be critical. The company’s commitment to shareholder value and its diversified portfolio offer a degree of stability, but navigating the challenges of AI implementation will be key to long-term success.