IBM’s Infrastructure Push: Can AI-Ready Mainframes and Hybrid Cloud Momentum Lift the Stock in 2026?

Meta description: IBM’s infrastructure strategy is gaining attention as AI, hybrid cloud, and the z17 mainframe cycle lift margins and profitability—here’s what it could mean for IBM shares in 2026.

International Business Machines Corporation (IBM) has spent years reshaping its business for the modern enterprise era. While many investors mainly think about software, consulting, and recurring revenue, IBM’s Infrastructure segment is quietly becoming a bigger part of the story again—especially as AI workloads expand and big companies demand secure, reliable, “always-on” computing.

This article rewrites and expands the original Zacks analysis published on Nasdaq, focusing on one central question: Can IBM’s focus on the Infrastructure segment help support the stock? We’ll break down what is driving the segment, why the current tech environment matters, how IBM compares to cloud giants, and what key numbers investors should watch.

Source reference: Nasdaq (Zacks): “Can IBM’s Focus on the Infrastructure Segment Aid the Stock?”

1) Why IBM’s Infrastructure Segment Is Back in the Spotlight

IBM’s Infrastructure segment includes two major pieces:

Hybrid Infrastructure: IBM’s enterprise systems and platforms that power critical workloads across on-premises and cloud-connected environments.
Infrastructure Support: Services that help clients run, maintain, and optimize those systems over time.

The reason this segment matters right now is simple: the world is running more complex computing than ever. Businesses are juggling classic apps (like transaction processing), modern cloud-native apps, and fast-growing AI workloads. That mix creates pressure for heterogeneous infrastructure—meaning different systems working together—rather than a one-size-fits-all approach.

In the Zacks report published on Nasdaq, IBM’s Infrastructure segment is described as benefiting from product innovation and stronger adoption tied to the z17 program, supported by broader investment in AI, hybrid cloud, and quantum. In other words, IBM isn’t just “selling old hardware.” It’s aligning core infrastructure with the next wave of enterprise computing needs.

2) The Real Driver: More Workloads, More Complexity, More Demand for Hybrid

Here’s what’s changing inside many large companies:

Cloud workloads are multiplying: Teams are launching new apps faster than ever.
Generative AI is spreading: Companies are experimenting with AI assistants, automated document workflows, code copilots, and industry-specific AI tools.
Security and compliance are tightening: Regulations and cyber risks push businesses to keep certain data and workloads under strict control.
Systems must interoperate: Firms need apps and data moving safely between environments—on-prem, private cloud, and public cloud.

This creates a “messy” real-world environment where enterprises must run a combination of technologies. And that is exactly where IBM’s infrastructure offering can fit: it’s built for mission-critical work and designed to integrate with hybrid cloud strategies.

Instead of betting everything on one public cloud provider, many enterprises are choosing a cloud-agnostic approach—mixing services across vendors while keeping sensitive workloads stable, auditable, and protected. IBM’s view is that this hybrid reality is not temporary; it’s the long-term operating model for many industries like banking, insurance, government, healthcare, and large-scale retail.

3) The z17 Program: Why a Mainframe Cycle Can Still Matter in 2026

To some people, “mainframe” sounds like a history lesson. But for many global enterprises, mainframes are still the engine behind huge volumes of transactions—payments, reservations, claims, account updates, and secure identity checks.

The Zacks piece notes that adoption tied to the z17 program has resonated with clients as AI use cases expand. The practical meaning is this:

Companies want AI in production, not just demos.
AI systems need high performance and tight security.
Many AI use cases depend on data that already lives in core systems.

When IBM aligns new system cycles with modern AI and hybrid cloud needs, it can create a stronger “refresh” story. That can help drive not only new product sales but also ongoing support and services revenue.

What makes this important for investors is that infrastructure refresh cycles can cause meaningful shifts in segment profitability—especially if IBM executes well and demand holds up in key industries.

4) HashiCorp Adds an Extra Layer to IBM’s Infrastructure Strategy

One of the most notable points in the Nasdaq-hosted Zacks analysis is the impact of IBM’s HashiCorp buyout. HashiCorp is known for tools used to manage and automate infrastructure across multi-cloud and hybrid environments.

Why does that matter for IBM’s Infrastructure segment?

Modern infrastructure is software-driven: Companies want to “define” infrastructure using code and automation rather than manual setup.
Multi-cloud is harder to manage than it looks: Different clouds have different rules, security models, and tooling.
Standardized automation reduces risk: Automated policies and repeatable deployments can improve reliability and security.

Zacks highlights that HashiCorp’s tool sets complement the IBM Red Hat portfolio and add functionality for cloud infrastructure management. This is a key strategic point: IBM can connect the dots between infrastructure hardware, hybrid cloud software, and the operational tooling that enterprises use daily.

In plain terms, IBM is trying to become a “full stack” hybrid partner—from the systems that run critical workloads to the software layer that orchestrates modern applications to the automation that keeps everything consistent across environments.

5) Profitability Signal: Infrastructure Segment Profit Jumped Meaningfully

A major data point in the article is the segment’s profitability improvement. The Zacks write-up on Nasdaq states that IBM’s Infrastructure segment profit was $644 million in third-quarter 2025 versus $422 million a year earlier, and that margins increased from 13.9% to 18.1%.

That kind of margin expansion is meaningful because it suggests:

Better product mix (selling higher-value systems or configurations)
Stronger support/services attachment (more revenue tied to lifecycle services)
Operating leverage (revenue rises faster than costs)

Of course, one strong period doesn’t guarantee a straight line upward. But rising profit and margin in a segment that some investors overlook can change how the market values IBM—especially if it is paired with stable performance in software and consulting.

6) The Bigger Trend: “Hybrid Cloud Infrastructure” Is Not One Market

When people say “cloud,” they often mean public cloud. But the enterprise world is broader than that. Hybrid infrastructure includes:

On-prem systems that must remain local for compliance, latency, or control
Private cloud environments built inside company data centers
Public cloud services for elasticity, rapid testing, and global scale
Edge deployments where data is processed close to where it’s generated

IBM’s long-term bet is that big organizations won’t choose only one place to run everything. Instead, they will mix environments and demand tools that unify operations. That’s where IBM sees durable demand for enterprise infrastructure plus hybrid management.

7) How IBM Competes While Cloud Giants Dominate Headlines

The Zacks piece includes a short section on tech firms riding hybrid cloud infrastructure and mentions two giants: Amazon and Microsoft.

Amazon (AWS): The IaaS Leader

AWS is widely known for dominating Infrastructure-as-a-Service (IaaS). Its strength comes from scale, breadth of services, and the ability to support everything from startups to huge enterprises. The Zacks commentary points out AWS as a high-margin business and notes its wide offering of purpose-built databases.

From IBM’s perspective, AWS isn’t just a competitor; it’s also part of the hybrid landscape that many IBM clients use. Many large firms will run some workloads on AWS while still relying on IBM-style “core” systems for mission-critical tasks.

Microsoft Azure: Big Enterprise Reach, Global Regions

Microsoft has aggressively expanded Azure, with a broad global footprint and deep relationships with enterprise IT. Zacks notes Azure’s wide regional availability and its portal-based access to services like virtual machines and databases.

Azure competes strongly in cloud platforms, but IBM aims to win where the customer needs help integrating across environments—especially when the business needs interoperability, governance, and security across different systems.

8) Stock Performance Context: Strong, But Not the Fastest

Zacks notes that IBM shares rose strongly over the past year, though the industry rose even more over the same period. This matters because it frames expectations: if IBM already climbed a lot, future upside depends on whether growth and profitability stay convincing.

Investors often ask two questions after a big run:

Is the business improving fast enough to justify higher prices?
Is the market underestimating something still “coming next”?

IBM’s Infrastructure progress could help answer the second question—especially if z17-driven demand and hybrid infrastructure needs remain strong.

9) Valuation Snapshot: Price-to-Sales Comparison

From a valuation perspective, the Zacks analysis says IBM trades at a forward price-to-sales (P/S) ratio of 4.05, below the industry level of 5.02.

Price-to-sales is a simple metric: it compares a company’s market value to its revenue. A lower P/S than peers can mean the market expects slower growth or sees higher risk. But it can also mean the stock is priced more cautiously—so positive surprises (like improving margins or better execution) can matter more.

In IBM’s case, the story isn’t “hypergrowth.” Instead, the bullish argument is often about:

steady growth in hybrid cloud-related areas
stronger margins through mix shift and operational discipline
dependable cash generation that supports investment and shareholder returns

10) Earnings Estimate Stability and Zacks Rank

Zacks reports that the Zacks Consensus Estimate for IBM’s 2025 earnings remained stable over the past 60 days, and IBM carries a Zacks Rank #3 (Hold).

Even if you don’t follow Zacks rankings closely, the estimate stability point is still useful. Stable estimates often suggest analysts are not rapidly downgrading expectations—though it also means the market may be waiting for a catalyst to push estimates up.

For IBM, catalysts could include:

continued momentum in z17-related infrastructure demand
better-than-expected margins in Infrastructure and Consulting
clear progress integrating HashiCorp into the hybrid platform story
strong enterprise adoption of AI offerings that connect to IBM’s infrastructure base

11) What Could Go Wrong? Key Risks to Watch

No stock story is complete without the downside. Even if IBM’s Infrastructure segment is improving, investors should track risks that could slow progress:

Demand Cycles Can Cool Off

Infrastructure refresh cycles can be strong for a period and then normalize. If customers delay spending due to macro uncertainty, the segment can feel it.

Competition Is Relentless

Public cloud providers keep innovating. They also offer integrated services that can reduce complexity for some customers, which could weaken IBM’s “hybrid integration” advantage in certain cases.

Execution and Integration Risk

Acquisitions like HashiCorp can add strategic value, but only if integration is handled well—technically, commercially, and culturally.

Investor Focus May Shift

Markets can suddenly care more about high-growth AI names or different themes. IBM must keep proving that its approach can deliver both relevance and returns.

12) Practical Investor Takeaways: What to Monitor in 2026

If you’re tracking IBM with a long-term mindset, here are practical signals to watch as 2026 develops:

Infrastructure segment margin: Can IBM maintain or expand the improved margin level?
z17 adoption pace: Is demand steady across industries like finance and government?
Hybrid cloud traction: Do customers describe IBM as essential to multi-cloud operations?
HashiCorp synergy: Are tools being bundled effectively with Red Hat and enterprise offerings?
Cash flow discipline: Is IBM balancing investment with shareholder-friendly policies?

In short: the Infrastructure segment can help the stock if it stays profitable, relevant, and tied to modern workloads—not just legacy demand.

13) FAQs About IBM’s Infrastructure Strategy and the Stock

FAQ 1: What exactly is IBM’s Infrastructure segment?

It’s the part of IBM that covers enterprise infrastructure offerings, including hybrid infrastructure solutions and infrastructure support services. It’s designed to run and support critical workloads in secure, reliable environments.

FAQ 2: Why does the z17 program matter for investors?

Because major system refresh cycles can drive revenue and profitability, especially when the technology matches current needs like AI and hybrid operations. Strong adoption can lift margins and improve sentiment.

FAQ 3: How does HashiCorp fit into IBM’s strategy?

HashiCorp adds infrastructure automation and management tools that can help enterprises operate across multi-cloud and hybrid environments. Zacks notes it complements IBM Red Hat and strengthens IBM’s ability to manage complex infrastructures.

FAQ 4: Is IBM competing directly with AWS and Azure?

Sometimes yes, but often IBM is also operating in the same customer environment where AWS and Azure are already used. IBM’s angle is helping enterprises manage complexity, security, and interoperability across environments.

FAQ 5: What financial metric in the article stands out most?

The Zacks analysis highlights Infrastructure segment profit rising to $644 million in Q3 2025 from $422 million a year earlier, with margins improving from 13.9% to 18.1%. That’s a meaningful profitability shift.

FAQ 6: Does this automatically mean IBM stock will rise?

No. Stock performance depends on many factors—overall growth, broader market conditions, competition, and investor expectations. But stronger infrastructure profitability can support the bull case if it remains sustainable.

Conclusion: Can IBM’s Infrastructure Focus Aid the Stock?

Based on the Zacks analysis hosted on Nasdaq, IBM’s Infrastructure segment is showing clear signs of renewed strength, supported by product innovation, z17 adoption, and enterprise demand for hybrid infrastructure in an AI-heavy world. The reported profit and margin improvement is a strong signal that the segment is not just “surviving,” but potentially becoming a more meaningful driver of IBM’s broader performance narrative.

Still, investors should keep expectations balanced. IBM is not trying to out-hype the biggest AI names. Instead, it’s positioning itself as the steady enterprise backbone for complex, regulated, mission-critical computing—where reliability and security matter as much as speed. If IBM can keep turning that positioning into higher margins and durable client adoption, its Infrastructure focus can indeed help support the stock story through 2026.

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