u/Corpulos ·
Reddit — r/ValueInvesting
· May 27, 2026 at 00:01
· ⬆ 44 pts
· 💬 48 comments
| View on Reddit ↗
AI Summary
Summary
The post argues that IBM is transforming from a boring compounder into an AI infrastructure play, citing Q1 2026 revenue growth (+9.5% YoY), margin expansion, and a low forward P/E of 17.3 relative to peers.
The author highlights IBM's hybrid cloud + AI stack stickiness with regulated enterprises and its recent federal quantum computing award, drawing a parallel to Nvidia's rise in AI.
The post is moderately well-researched DD, mixing financial data with a speculative comparison to Nvidia’s past trajectory.
Score44
Comments48
Upvote %70%
▶ Full Post Text
IBM is a classic boring compounder that's quietly turning into a legitimate AI infrastructure play. Q1 2026 revenue came in at $15.9B, up 9.5% YoY, a combo of software, infrastructure and mainframe--enterprises are now running AI inferencing workloads directly on IBM hardware. Operating margins expanded 140 basis points and earnings are up nearly 20% YoY. The P/E sits at roughly 22.6, forward P/E of 17.3 (compare to 22 for microsoft and 23 for oracle. The bull case is straightforward: IBM's hybrid cloud + AI stack is sticky with large regulated enterprises — banks, governments, healthcare — that can't just shift to hyperscalers. The stock is down 16% YTD, creating a potential entry point. They were singled out as the primary recipient of the recent US federal government quantum award -- this is the main story: they've already been identified as the leader in quantum computing. Think about where AI was 6 years ago and what happened to Nvidia since that time. If you missed out on Nvidia, this could be your second chance.
$IBM
Current share price: $249
Q1 2026 revenue $15.9B (+9.5% YoY), operating margins +140 bps, earnings +20% YoY, P/E 22.6 (fwd 17.3), stock down 16% YTD. Low valuation and recent pullback create an entry point; IBM’s enterprise AI/quantum positioning could drive multi-year growth similar to Nvidia’s earlier phase. Bet on IBM as a value play with AI/quantum upside; risk/reward positive given current discount. Quantum timeline is uncertain; enterprise AI adoption may disappoint; competition from hyperscalers could erode market share.