IBMInternational Business Machines Corporation

IBM is an enterprise contractor: consulting, hybrid-cloud software, and mainframes that have not gone away.

The company reorganised around three pillars. Software is the highest-margin part, built around the acquired Red Hat and its OpenShift platform, which sells the ability to run the same applications in your own data centre and in someone else's cloud. Consulting implements that at customers and supplies volume. Infrastructure is the Z-series mainframe, still running banking and insurance systems.

The mainframe remains an unusually durable business: rewriting decades of accumulated code for another platform is expensive and risky, so customers refresh hardware by generation. That produces pronounced revenue cyclicality — the year a new machine ships looks very different from the year after.

IBM is an income stock with a long payout history, and that defines its investor base. Growth is modest, and the central question is whether software can grow fast enough to offset slow consulting and cyclical infrastructure.