IBM’s first quarter results exceeded Wall Street’s expectations for both revenue and non-GAAP earnings, driven by robust demand for AI-enabled infrastructure and strong growth in its software portfolio. Management highlighted double-digit growth in software, particularly in data and Red Hat, and record performance in its Z mainframe segment. CEO Arvind Krishna attributed these gains to “the durability of our portfolio” and the company’s focus on enabling clients to modernize core systems and scale AI deployments. Despite these operational achievements, the market responded negatively, indicating investor caution about the sustainability of recent gains and potential external risks.

Is now the time to buy IBM? Find out in our full research report (it’s free for active Edge members).

While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions From IBM’s Q1 Earnings Call

• Amit Daryanani (Evercore ISI) asked how IBM’s software mix positions it for AI-driven value. CEO Arvind Krishna explained the portfolio’s focus on enabling software and infrastructure, noting, “AI is structurally increasing the demand for the portfolio.”
• Wamsi Mohan (Bank of America) questioned the sustainability of software growth and M&A appetite. CFO Jim Kavanaugh described confidence in continued software acceleration, while Krishna clarified, “We remain disciplined acquirers, but current valuations could make future deals attractive.”
• Benjamin Reitzes (Melius Research) pressed on why IBM did not raise guidance given strong results. Krishna and Kavanaugh cited historical prudence and macro uncertainty: “We have never raised guidance in the first quarter… it’s just prudent to wait.”
• Fatima Boolani (Citigroup) asked about mainframe AI use cases and monetization. Krishna detailed the shift toward AI inferencing directly on mainframes, enabling real-time fraud detection, and Kavanaugh added that “new workloads are driving higher hardware and software monetization.”
• Erik Woodring (Morgan Stanley) inquired about supply chain risks. Kavanaugh reassured that “commodity cost increases, particularly in memory, have had a de minimis impact,” emphasizing IBM’s longstanding supplier relationships and mitigation strategies.

Catalysts in Upcoming Quarters

In the quarters ahead, the StockStory team will monitor (1) the pace of software segment growth, particularly from AI and data products, (2) the integration progress and synergy realization from the Confluent acquisition, and (3) margin expansion as productivity initiatives mature. We will also be watching for any signs of macroeconomic pressures impacting consulting demand, as well as the rollout of new AI-enabled infrastructure offerings.

IBM currently trades at $232.87, down from $251.86 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free).

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