Shares of IBM (IBM) currently trade at 19.9 times earnings, while the S&P 500 sits at 21.9. Investors buying at that multiple need to understand the underlying assets, and the company has recently changed its messaging.
Shares of IBM (IBM) currently trade at 19.9 times earnings, while the S&P 500 sits at 21.9.
Investors buying at that multiple need to understand the underlying assets, and the company has recently changed its messaging.
Shares of IBM (IBM) currently trade at 19.9 times earnings, while the S&P 500 sits at 21.9. Investors buying at that multiple need to understand the underlying assets, and the company has recently changed its messaging. During the fiscal Q2 2025 call, executives focused on a running total of generative AI business that they defined as their book of business. The most recent presentation offered a different focal point. So what is management talking up instead?
IBM Now Talks Up Recurring Software Revenue
Executives are now framing the company around reliable, repeating software revenue. During the fiscal Q2 2026 call on July 22, 2026, the company noted that about 80% of its annual software revenue is recurring. This division accounts for nearly 45% of total revenue.
A year prior, leadership anchored its pitch to a different metric. During the fiscal Q2 2025 call, the company reported its generative AI book of business stood at over $7.5 billion since inception. That figure climbed from over $3 billion during the fiscal Q3 2024 call. Highlighting a rapidly growing cumulative total gave investors a straightforward view into AI demand.
Generative AI remains part of the conversation. Management noted on the latest call that the technology represented about 50% of quarterly Consulting signings. Yet the company has stopped emphasizing the cumulative tally.
Software Is IBM’s Largest Source Of Revenue
The software unit brought in $30.0 billion in fiscal 2025, accounting for 44% of the company’s revenue over that period. Sales in the division expanded by 10.6%, compared with a 1.8% growth rate for Consulting, which is the second-largest business segment.
The company also tracks annual recurring revenue. Executives placed that metric at $24.6 billion during the most recent call, representing an 8% increase from a year earlier.
Averytin News Financial update.