What Happened?

Shares of technology and consulting giant IBM (NYSE:IBM) fell 7.5% in the afternoon session after the company reported mixed first-quarter 2025 results, as a significant operating income miss weighed on the overall performance. On the other hand, IBM exceeded expectations for revenue, adjusted EPS, and EBITDA. Overall, we think this was a decent quarter, with some key metrics above expectations. The areas below expectations seem to be driving the move, and shares traded down.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy IBM? Access our full analysis report here, it’s free.

What The Market Is Telling Us

IBM’s shares are not very volatile and have only had 6 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.

The biggest move we wrote about over the last year was about 1 month ago when the stock dropped 6% as consulting stocks fell after Defense Secretary Pete Hegseth announced that the government would cancel some consulting contracts. 

Also consulting firm, Accenture, reported its Q4 2024 (fiscal Q2 2025) financial results and raised concerns about weaker sales in the fed vertical. Accenture CEO Julie Spellman Sweet noted that the new administration was focused on improving government efficiency, leading to a slowdown in procurement processes and negatively impacting sales.

IBM is up 4.6% since the beginning of the year, but at $230 per share, it is still trading 13.1% below its 52-week high of $264.74 from February 2025. Investors who bought $1,000 worth of IBM’s shares 5 years ago would now be looking at an investment worth $1,844.

Here at StockStory, we certainly understand the potential of thematic investing. Diverse winners from Microsoft (MSFT) to Alphabet (GOOG), Coca-Cola (KO) to Monster Beverage (MNST) could all have been identified as promising growth stories with a megatrend driving the growth. So, in that spirit, we’ve identified a relatively under-the-radar profitable growth stock benefiting from the rise of AI, available to you FREE via this link.