IBM: "Joy reigns" - good entry... +17%!

In the last WI issue, the title was: "Should you or shouldn't you!" We opted for a buy limit of USD 220! The opening price was already USD 217.56 on May 13, at which point we became IBM shareholders (FX: 0.7810). We include 3 shares in the sample portfolio. Within a few days, the share price climbed to a pleasing USD 264.38. What prompted this surge? The share was boosted on the one hand by strong quarterly figures and on the other by a government subsidy. IBM recently reported revenue growth of +6% for 1Q26, with the core areas of hybrid cloud, AI and mainframe systems contributing to the revenue momentum. Mainframe systems (mainframes) are high-performance, highly reliable computer systems. They are designed to process masses of simple transactions and data in real time without downtime. They form the backbone of business-critical applications, such as those used by banks, insurance companies and airlines. At the same time, free cash flow reached USD 2.2 billion (+13% year-on-year), the strongest quarterly figure in ten years. With earnings of USD 1.91 per share, IBM exceeded estimates of USD 1.81. New contracts in the consulting business returned to growth with an increase of +6%. Generative AI already accounts for around 30% of the consulting order backlog. It is also pleasing that institutional investors have increased their holdings of IBM shares!

However, probably the biggest price driver came from the news that the US Department of Commerce announced that IBM will receive USD 1 bn in government funding to support the development of quantum computers. The total package amounts to USD 2 billion and will be awarded to a total of nine companies. The agreements also include government equity investments. The topic of quantum computers will be covered in a future issue. Our price target: USD 290!