2Q26 Earnings Preview / IBM State of The Union- Estimate Upside Largely Priced-In

Research evidence excerpt

2Q26 Earnings Preview / IBM State of The Union- Estimate Upside Largely Priced-In

Idea

July 14, 2026 04:50 AM GMT

Morgan Stanley & Co. LLCMIBM | North America Erik W Woodring

Equity Analyst

2Q26 Earnings Preview / IBM Erik.Woodring@morganstanley.comRauf Ural +1 212 296-8083

Research Associate

Rauf.Ural@morganstanley.com +1 212 761-5958

State of The Union- Estimate Maya C Neuman

Maya.Neuman@morganstanley.com +1 212 761-1946

Upside Largely Priced-In Dylan Liu

What’s Changed Dylan.Liu@morganstanley.com +1 212 761-4519

Wen Zhang, CFA

IBM (IBM.N) From To Equity Strategist

Price Target $267.00 $293.00 Wen.Zhang@morganstanley.com +1 212 761-1732

While we see upside to Infra and potentially to SW ests, we IBM (IBM.N, IBM UN)

IT Hardware | United States of America

think this is already in the price. CIO checks tell us the IBM

Stock Rating Equal-weight

spending landscape hasn't changed materially, making (1) FCF Industry View Cautious

Price target $293.00

upside and/or (2) M&A/Quantum the next legs needed for IBM Shr price, close (Jul 13, 2026) $290.23

to outperform. M2M valuation raises PT to $293 from $267. Mkt52-Weekcap, currRange(mm) $332.41-212.35$276,858

Fiscal Year Ending 12/25 12/26e 12/27e 12/28e

EPS ($)§ 11.35 12.44 13.44 14.77M P/E 25.6 23.4 22.1 19.8

Key Takeaways Div yld (%) 2.3 2.3 2.3 2.3

EPS ($)** 11.58 12.42 13.14 14.66

We believe there are areas of upside to numbers in 2Q, particularly in Infra, but Prior EPS ($)** - 12.43 13.15 14.67

we think the market is already pricing this in at current levels. Unless otherwise noted, all metrics are based on Morgan Stanley ModelWare

framework

Our 2Q AlphaWise IBM Software Tracker points to a Q/Q acceleration in SW §**==ConsensusBased on consensusdata is providedmethodologyby Refinitiv Estimates