IBM Plays Down Trump Tariff Concerns: DOGE Could Affect Consulting Business, But Its 'US Federal Business Is Less Than 5%,' Says CEO

International Business Machines Corporation IBM has forecasted a “minimal” tariff impact on its business while acknowledging not being “immune” to the Department of Government Efficiency-related initiatives during its first quarter earnings call.

What Happened: IBM’s CFO and Senior Vice President, James Kavanaugh, said that the company was exploring alternatives to mitigate any indirect effects because the direct tariff impact was “minimal.”

“Goods imported to the U.S. represent less than 5% of our overall spend, and under current U.S. tariff policy, the impact to IBM is minimal. While we have limited direct exposure outside the United States, we are tactically evaluating alternative sources and other strategy to mitigate tariffs,” he said.

Talking about the impact of DOGE-related initiatives, its Chairman, President, and CEO, Arvind Krishna, highlighted that its consulting business was “susceptible to discretionary pullbacks and DOGE-related initiatives.”

“We are not immune from all those activities just like everybody else,” he said, adding that few of IBM’s contracts were impacted in the first quarter. “You expect U.S. AID, where we did some work, was impacted, but not really in most other cases,” he added.

Additionally, CFO Kavanaugh clarified, “But our U.S. federal business is less than 5% of IBM’s total annual revenue. About 60% of that is Consulting, which is more susceptible to discretionary efficiency-type programs.”

“So while no one’s immune, we are absolutely focused on monitoring the dynamic process,” said the CFO.

Why It Matters: IBM reported quarterly earnings of $1.60 per share, which beat the analyst consensus estimate of $1.40. Quarterly revenue of $14.54 billion beat the analyst consensus estimate of $14.4 billion.

The company also reported its highest first-quarter free cash flow in many years at $2 billion, driven by revenue growth and productivity initiatives.

IBM sees second-quarter revenue in a range of $16.4 billion to $16.75 billion, versus the $16.33 billion estimate.

Price Action: IBM closed 1.89% higher on Wednesday and slipped 6.96% in after-hours. It has gained 11.61% on a year-to-date basis, whereas it was up 33.34% over a year.

The SPDR S&P 500 ETF Trust SPY and Invesco QQQ Trust ETF QQQ, which track the S&P 500 index and Nasdaq 100 index, respectively, rose on Wednesday. The SPY was up 1.55% to $535.42, while the QQQ advanced 2.27% to $454.561, according to Benzinga Pro data.

Benzinga Edge Stock Rankings shows that IBM had a weaker price trend over the short term, but a stronger price trend over the medium and long term. Its momentum ranking was solid at 87.57th percentile, whereas its value ranking was poor; the details of other metrics are available here.