IBM trades at 19.9 times earnings, compared with 21.9 for the S&P 500. On its fiscal Q2 2026 call on July 22, 2026, the company emphasized recurring software revenue, noting that about 80% of its annual software revenue is recurring, instead of the cumulative generative AI book of business it highlighted a year earlier, which had passed $7.5 billion. Software is IBM’s largest division, with $30.0 billion in fiscal 2025 revenue, or 44% of the total, growing 10.6%, and annual recurring revenue reached $24.6 billion, up 8%. However, software missed expectations in fiscal Q2 2026: revenue grew 5% but organic growth was flat, as tens of large deals did not close on time. Leadership then cut its 2026 software growth forecast to 6% to 8%.
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