Tech giant International Business Machines Corp (NYSE:IBM) is set to report first-quarter (Q1) financial results on Wednesday after market close.

Here are the earnings estimates, what analysts are saying ahead of the report and key items to watch.

IBM Q1 Earnings Estimates

Analysts expect IBM to report Q1 revenue of $15.64 billion. That’s up from $14.54 billion in last year's first quarter, according to data from Benzinga Pro.

The company beat analyst estimates for revenue in five straight quarters and in eight of the last 10 quarters overall.

Analysts also expect Q1 earnings of $1.81 per share, up from $1.60 per share in last year's first quarter.

IBM has beaten analyst estimates for earnings per share in 12 straight quarters.

What Analysts Are Saying About IBM

Wedbush analyst Dan Ives recently said investors may misunderstand IBM’s AI growth.

The analyst currently has a $340 price target on IBM.

According to Ives, IBM is well-positioned for further growth as the enterprise sector adopts more AI use cases. The analyst praised the firm’s combination of software and infrastructure to help capture additional AI growth.

Bank of America Securities analyst Wamsi Mohan expects IBM's acquisition of Confluent, which closed a quarter earlier than expected, to also put AI in the spotlight for the company.

Mohan, who has a Buy rating on IBM and a price target of $300, says guidance on what the Confluent acquisition means could be a key area to watch on Wednesday.

Here are other recent analyst ratings on IBM and their price targets:

  • Jefferies: Maintained Buy rating, lowered price target from $370 to $320
  • RBC Capital: Maintained Outperform rating, lowered price target from $361 to $330
  • Oppenheimer: Maintained Outperform rating, lowered price target from $380 to $320
  • Stifel: Maintained Buy rating, lowered price target from $340 to $290

Key Items to Watch in Q1 Results

The analysts expect to hear more about IBM's AI growth, and that is likely what could happen given recent announcements.

IBM recently announced a new collaboration with Adobe, which centers on an AI-powered user experience. The companies working together on AI could demonstrate the latest shift to address the growing use cases in the segment. The partnership sees Adobe Experience Platform Agent Orchestrator team up with IBM's agentic AI expertise to help identify customer intent.

Growth in AI within the consulting segment could be big for IBM, since that segment posted the lowest year-over-year growth in the fourth quarter. All three of IBM's main reporting segments (Software, Consulting, Infrastructure) saw year-over-year growth in the fourth quarter.

The company said its AI book of business stood at $12.5 billion at the end of the fourth quarter, signaling strong future growth.

Investors and analysts will be looking for an update on the book of business and overall fiscal year guidance.

IBM is the 14th-largest holding in the SPDR Dow Jones Industrial Average ETF (NYSE:DIA) at 3.16% of assets. The tech giant is one of several Dow Jones components reporting earnings this week, which could make the long-running price-weighted market index volatile.

IBM Stock Price Action

IBM stock is up 1.7% to $257.93 on Tuesday, versus a 52-week trading range of $220.72 to $324.90. The company’s share price is down 11.5% year-to-date.

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